Do More with a Construction Loan

Do More With Construction Loans

Why buy when you can create? Build the home you’ve been dreaming of with a BECU construction loan.

Between a competitive housing market and rising costs, finding a home can be a challenge. And when it comes to your home search, you shouldn't have to settle for something that isn't exactly what you want. You should have the freedom to create your own personal Taj Mahal, right?

Let's help you channel that creativity.

With a BECU construction loan, you'll be in charge of your home building project from the ground up – literally. You'll choose the land parcel, the contractor, design, and finishing touches. The loan funds it all, from lot to completion. Here's what you need to know before you start, and how our loan types can help you.

Getting Started

When considering a construction loan, you have options. Your choice of loan will largely depend on whether you already own the land or structure on which you want to build. Whichever option you go with, you'll only be required to make interest-only payments during the construction process. Once complete, the loan converts to a permanent mortgage without any additional paperwork, requalification, or fees.

Here's what you'll need to know about our construction loan types:

Construction to Permanent Loans

Construction to permanent (CP) loans help finance the purchase of your lot and pay builders to construct a house on it. With a CP loan, you can build your custom dream home (unique build), or buy a ready-to-build home in a housing development (specification build). 

A CP loan would be the right choice for you if you're ready to get started on the construction phase. Once approved and funded, BECU will withdraw funds from your CP loan to pay contractors for work completed, as well as any construction materials involved. Advantages of a CP loan include:

  • Lower down payment. You'll only need to put down 20% instead of the usual 30%.
  • Flexible draw period. Depending on how long construction is estimated to take, you can set up to a 12-month draw period for your CP loan, and make interest-only payments during this term.
  • Monthly inspections of expenses paid and checking for any outstanding liens against the project.
  • A licensed general contractor you can hire to build your home. Or, if more than 75% of your income is generated from being a general contractor yourself, owner-as-builder arrangements can be made.

Land Loans

Land loans, on the other hand, are for buying unimproved or “raw” lots without immediate plans to build. This loan type lets you lock in a low interest rate and pay only the interest while you finalize your building plans and hire a contractor.

Of course, each land parcel will vary in how developed and ready it is to build on. The terms of the loan will depend on these factors. Here's a quick breakdown of how we classify each land type for the purposes of a land loan:

  • Land improvement lots have a structure such as a house already built on them. The structure must be able to be connected to utility services, and have access to paved roads.
  • Unimproved/raw land has no residential or commercial development already in place, and limited or no access to paved roads or existing utility service.
  • Partially-improved land has no house or structure built on the lot, but has utility service and access to paved roads.

Important note: Most cities and towns require permits for home construction. To ensure you're on the right track, contact your local public agency about getting permits before you apply, and remember to budget for any related fees in your total construction costs.

More questions? We've got answers! 

No matter which type of construction loan you choose, it'll fund everything from purchasing the land to finishing the build. A BECU mortgage advisor can answer your questions and talk you through applying for a construction loan to guide you through the process. Happy building!

Helpful Resources

Loans are subject to credit approval and other underwriting criteria and not everybody will qualify.  Certain restrictions apply.  Home Loan programs, terms and conditions subject to change without notice.  Boeing Employees' Credit Union NMLS ID 490518