Build a Home or Remodel

A construction loan is short-term financing that covers the cost of building a custom home or renovating an existing home. These funds can be used for all the costs related to the project, including permits, materials, labor, and other expenses.

No. The design phase of construction is not included in your loan. This step of the process must be completed before loan approval.

Funds can be used for all costs related to the project including land purchase, permits, materials, labor, and other hard costs.

Yes. You may be able to count some of your equity toward your down payment. If you have owned your property for six months or more, a current appraisal of the land will be used to determine your equity. If you have owned your property less than six months, the sales price will be used to determine your equity.

First Interstate offers a standard construction term of 12 months, with the option of extending up to an additional 12 months if needed, with approval. Coordinating with your builder’s timetable is important to ensure completion is possible within this period.

Loan disbursements, also called draws, are paid to your builder as building progresses. Draws are paid upon builder/client request. First Interstate’s draw department is internal but also utilizes the Built digital draw-management platform.

Your monthly payments are interest only and are billed monthly. The amount of interest you pay is based on the actual amount drawn against your construction loan. Your payments will gradually increase as your builder draws funds toward the completion of your home.

Your full monthly payments (both principal and interest) will begin once your home is completed, and your construction mortgage converts to your permanent mortgage. If you desire an escrow account for taxes and insurance, it can be added to your monthly payment at this time.

If the construction costs come in below the original amount of the loan, those funds can be used for overages, landscaping, or if you choose, you can use them to pay down your balance, and we will modify the note/payment.

1. Understand how the inspections for draw disbursement will be handled.
2. Understand your payments during construction.
3. Know how long you have to build your home.
4. Know the terms and payment for your permanent mortgage.