A short-term loan that pays for the cost of building a home, released in stages (“draws”) as work is completed rather than in one lump sum. Once construction is finished, the loan is typically rolled into a permanent mortgage.
Construction Loan
A construction loan is a mortgage that finances the cost of building a new home rather than purchasing an existing one. Unlike a traditional mortgage, funds are released in stages — called draws — as construction progresses and each phase is inspected.
Many New Hampshire homebuyers use a One‑Time Close construction loan, which combines the land purchase (if needed), construction financing, and permanent mortgage into a single loan with one closing. After the home is built, the loan automatically converts to a traditional mortgage.
One‑Time Close construction loans are available through several programs, including: • FHA (minimum 3.5% down) • VA (eligible veterans may qualify for 0% down) • USDA (100% financing in eligible rural areas) • Conventional financing (5% down)
Because construction loans involve builder approval, construction timelines, inspections, and draw schedules, it’s best to speak with a lender before purchasing land or signing a building contract.
Want to learn more? Read our complete guide to New Hampshire Construction Loans, where we cover the most common questions about building a home, One‑Time Close loans, builder requirements, credit scores, and more.