How do you qualify for a construction mortgage loan in 2019?


LoanSafe Member
Jun 14, 2019
Under the impression I can get a home loan of building a new home on land I inherited, I assumed that going through my bank would be the best way to get a loan to build a house. I was told that in some places, you need to get a construction mortgage loan as there are different laws and regulations. What do you need to qualify for this type of loan?


LoanSafe Member
Jun 20, 2017
Most banks, but not all, require a construction loan on a new home. After the home is built, you convert to a regular mortgage. Since their is no home for the bank to use as collateral, construction loans usually have higher interest rates than traditional mortgage loans.

Even though you inherited the land, and its probably debt free, most lenders dont loan money on vacant land. You can list it as an asset when appyling for a loan. Banks are going to look at your income and debt ratio. They have debt to income ratios to follow and if you are within those guidelines, they will approve you.

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
San Diego, California
Jzone is right on the money and I want to add in a few key points. A construction loan is typically a 12 month balloon, meaning you have 12 months to complete the build. Once the build is complete the lender that did the construction loan for you will do what is called a Perm loan (conventional, FHA...etc). The qualifications of a construction loan are very similar to a conventional loan only they require a little more down (10% of the construction costs). For example you must meet the debt-to-income ratio and other requirements for whatever perm loan you are going to get into.