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Construction Loans

Financing your vision from the ground up. Interested in a construction loan?

Contact a Construction Loan Officer to apply FAQs

Loans are subject to approval

It’s more manageable to build than you realize — especially with the right financing. If you’re looking to build or renovate, no matter the size of your project, First Interstate has a loan built for you.

All-in-One

Combine your short-term construction and permanent financing into a single loan. The All-in-One loan is available for both conforming and jumbo loan amounts and consists of two phases: construction and permanent loan. During the construction phase, payments are interest only. When construction on your home is complete, the loan transitions into permanent financing with no need to requalify—and you only pay closing costs once. Your interest rate is locked in at closing with an interest rate float down option. If rates improve prior to closing, you can take advantage of lower market rates.

Construction-Only

This traditional short-term loan, also called a two-time-close, covers the cost of land, permits and fees, and the building of your home. It is paid in full when construction is complete. You will need to qualify for and obtain a separate loan to refinance into for your permanent financing.

Renovation

A home renovation loan allows you to finance labor, materials, and other hard costs to improve your home. The loan amount is based on the estimated value of the home after your renovations. Whether you’re looking to remodel, finish your basement, add-on, or make other major home improvements, a home renovation loan can help get your project underway.

Frequently Asked Questions

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.

You must complete construction within the term of your loan. Typically, First Interstate offers six months for manufactured/modular homes, 12 months for custom homes, and 12-18 months for larger projects. Exceptions may be made for terms between 18-24 months. It is important to coordinate with your builder’s timetable 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.

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.