Did you find a lot in a terrific neighborhood in Eugene? Happily, it’s possible to find financing that will help you turn an empty lot into the address of your dream home. Let’s look at how a construction-to-permanent loan can take your fantasy residence and turn it into your new home.

Construction-to-Permanent Loan Basics

Let’s begin with a look at the basics of a construction-to-permanent loan. Essentially, it’s a way to finance the construction of a house. The financing begins as a construction loan that becomes a permanent home mortgage after the building completes.

Although this type of financing converts into a home mortgage, it is very different from a conventional home loan. The fundamental difference is that regular home loans do not finance the purchase of land. Therefore, you can’t use a traditional home loan to buy a fabulous piece of land to build your dream home in Lane County.

An exciting feature of this loan is that you control how much debt you assume during the project. Unlike traditional home loans, where you work with a lender to borrow money for a specific property, a construction-to-permanent loan works more like an equity line. As with a credit line, you decide how much money to spend from a maximum loan amount.

A construction-to-permanent loan is an outstanding option to consider when you find a particular property that makes you want to plant your future. However, don’t discount the fact that there are pros and cons to this kind of loan.

Pros and Cons of This Loan

Every kind of real estate financing carries its share of perks and downsides. Here are some pros and cons to understand when considering using a loan that flows seamlessly from construction to monthly mortgage payment phases.


Perhaps the most exciting perk is that you won’t need to go through the loan process multiple times for the same project. Instead, save time and repetition by applying for one loan. What’s more, you only have to come up with enough cash to cover one round of loan closing costs.


A significant reason for some of the downsides of this kind of financing is that the lender assumes substantial risk before the home is complete. As a result, you can expect:

  • Extensive loan documentation requirements
  • Interest rates that are higher than with conventional loans
  • Interest-only payments during the construction phase
  • Substantial down payment requirements

Requirements to obtain the loan vary according to the lender. It’s worth it to compare lenders to get the most advantageous loan package for your project.

Simplify Your Home Build

There’s no question that you’ll appreciate a smooth financing process when you use a construction-to-permanent loan. The basic steps you can expect to go through to build your dream home are outlined below.

Examine Your Financial Situation

Before you visit a lender, it’s smart to analyze your financial situation in detail. Find out your credit rating and take measures to improve it if necessary. Make sure you know how much money you can afford to invest in a new home.

Apply for a Construction-to-Permanent Loan

Since construction-to-permanent mortgage financing works in a line-of-credit manner, you’ll apply for the loan before you purchase the land. You can tap into the loan money to pay for the land, construction, and mortgage.

Work with a Real Estate Professional

Lane County real estate is in high demand. Hiring a real estate professional who has experience helping clients purchase buildable land is an essential part of successfully constructing your dream home.

Partner with an Architect and Contractor

Once you buy the land for your house, you’ll have a firm idea of how much money you want to spend designing and constructing the structure. High-quality architects and general contractors are experts in designing and crafting beautiful homes that meet your needs and budget.

You can withdraw money from the construction loan amount as the project moves through the process. An inspector from the lender will typically check to ensure that the agreed-upon work is complete before releasing the funds.

Generally, you’ll have approximately one year to finish your construction project. Since your lender wants you to turn your empty lot into a completed home within twelve months, knowing what you want out of the project early on is vital.

Last Thoughts

Lastly, using a construction-to-permanent loan to build your dream home makes for a smooth process. Partnering with a first-class lender and experienced professionals in real estate, architecture, and construction will help to create your ideal home.

The lending officers at Strategic Mortgage Solutions will help you understand the pros and cons of construction and mortgage loans. Contact us to discover how the right kind of loans can make all the difference in building a house in Eugene, OR.