Your Construction Financing Specialist
Todd Uzzell
Senior Mortgage Specialist
NMLS License
#1525192
Direct Phone
480-330-1724
info@arizonahomeloansusa.com
Finance custom home builds with construction-to-permanent financing. Lock in your rate before construction starts. Pay interest-only during building phase (6-12 months), then convert to a standard mortgage when the home is completed. Perfect for Phoenix custom builds, Arizona infill projects, and specialty construction.
Get Pre-Approved for Construction Financing
Senior Mortgage Specialist
NMLS License
#1525192
Direct Phone
480-330-1724
info@arizonahomeloansusa.com
Typically 6-12 months. You draw funds in installments as construction progresses (framing, foundation, drywall, finalization). You pay interest-only on funds drawn, so early draws have minimal payments.
Example: 8-month build
Month 1-2: Draw $100K foundation → pay interest only (~$700/mo)
Month 3-5: Draw $250K framing → pay interest on $350K (~$2,400/mo)
Month 6-8: Final draws → full amount borrowed earning interest
After construction completion, the construction loan automatically converts to a standard 30-year mortgage. Appraisal is re-done on completed home, and standard mortgage terms apply.
No Second Closing
One big advantage: single closing at the beginning. No second closing needed when construction converts to mortgage, so you save 1-2% in closing costs.
Your interest rate is locked when you close the loan, not at construction completion (6-12 months later). Protects you if rates rise during build.
During construction, you pay only interest on funds drawn. No principal payment until home is complete and loan converts to mortgage.
Funds are released as construction progresses (framing inspection passed, roof complete, etc.). Lender verifies progress before each draw.
Builder must be licensed, insured, and bonded. Lender will require builder background check and contract review before funding.
Final appraisal is done when home is completed. Must appraise at or above loan amount for conversion to standard mortgage.
You close once at the beginning, not twice. Saves $1,500-3,000 in duplicate closing costs that a traditional construction loan would incur.
Custom single-story on half-acre lot, 8-month construction timeline
Total Build Cost: $650,000
Down Payment (20%): $130,000
Construction Loan Amount: $520,000
Construction Interest Rate: 8.00% (temporary during build)
Average Monthly Payment (Construction Phase) $3,467/month (interest-only)
After Completion (Permanent Phase)
Final Home Appraisal: $650,000 (meets build cost)
Permanent Loan Amount: $520,000
Permanent Interest Rate: 6.40% (locked at origination)
New Monthly Payment (30-Year) $3,285/month
Modern urban infill on small lot, 10-month build (urban delays typical)
Total Build Cost: $825,000
Down Payment (15%): $123,750
Construction Loan Amount: $701,250
Construction Interest Rate: 8.15%
Average Monthly Payment (Construction Phase) $4,758/month (interest-only)
After Completion (Permanent Phase)
Final Home Appraisal: $825,000
Permanent Loan Amount: $701,250
Permanent Interest Rate: 6.50%
New Monthly Payment (30-Year) $4,565/month
Phase 1
Foundation
(Weeks 1-4)
~$130K
Phase 2
Framing
(Weeks 5-12)
~$175K
Phase 3
Drywall
(Weeks 13-20)
~$130K
Phase 4
Interior
(Weeks 21-28)
~$110K
Phase 5
Final
(Weeks 29-32)
~$75K
Lender inspects and approves each phase before releasing funds. Timeline varies by complexity and weather delays.
Construction overruns are common (5-15%). Plan for contingencies. If you borrow $500K and construction costs $525K, you'll need to cover the gap from personal funds.
Budget for 6-12 months of interest-only payments while building. If borrowing $500K at 8%, that's $3,333/month in interest costs during construction—on top of property taxes and utilities.
Arizona weather, supply chains, and permit delays extend timelines. A "6-month build" often takes 8-10 months. Extra time = extra interest costs.
Lenders require licensed, bonded builders with good track records. Don't choose an unlicensed handyman "to save money"—you won't get financing and may end up in dispute.
Get pre-approval before signing a purchase contract for the land. Know your budget before you start negotiating with builders.
If your $650K home appraises at $600K, the lender will reduce the permanent loan amount. You'll need cash to cover the difference, or renegotiate.
Construction-to-perm is a single loan that automatically converts to a mortgage at completion. You close once, rates are locked upfront, and you save closing costs. Traditional construction loans require a second closing when converting to a mortgage (extra $1,500-3,000 in costs) and rates might change between construction and permanent phases.
Yes. Your permanent mortgage rate is locked when you close the construction-to-perm loan. Even if construction takes 12 months, your rate remains fixed. This protects you if rates rise during the build.
If construction costs exceed the budgeted amount, you'll need to cover the gap from personal funds. The lender won't increase the loan. Plan for a 5-10% contingency reserve to cover overruns (permit delays, material shortages, design changes).
Draws are released as construction phases are inspected and approved. Typical schedule: foundation inspection → 15% draw; framing complete → 25% draw; drywall → 25% draw; interior → 20% draw; final inspection → 15% draw. Lender sends inspector to verify each phase before releasing funds.
No. Property taxes don't start until the home is completed and you take possession. You'll pay property taxes for the first time at your first permanent mortgage payment (or in escrow).
The permanent loan is reduced to the appraised value. If you build a $650K home that appraises at $600K, your permanent loan is $480K (assuming 80% LTV). You'd need to come up with $50K to cover the shortfall—or negotiate with the builder for a price reduction.
Building a luxury home over $766K? We offer jumbo construction-to-perm financing with specialized terms for high-end custom builds.
Learn More →See today's construction and permanent mortgage rates. Lock your rate now for your custom home build timeline.
View Rates →Start your construction-to-permanent loan application today. Pre-approval takes 1-2 days so you can move forward with builder negotiations.
Start Now →Get pre-approved for construction-to-permanent financing today. Lock your rate, secure your loan, and start building. We handle the entire process from groundbreaking to keys in hand.