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If you are planning on applying for a construction loan there area few things you should know before you get started. First, lenders have to know the story behind the planning of the house before they will give you a loan. This means that construction loans don’t abide the guidelines of Freddie Mac and Fannie Mae.
Construction Loans are usually interest-only payments during construction and are due when the construction is complete.
Construction loans are usually variable-rate loans priced at a spread to the prime rate or some other short-term interest rate. One factor in a construction loan is how much of the project cost the lender is willing to lend. For example, If you already own the land, then that can be considered as equity on the construction loan.