Build with conventional financing and mortgage insurance that actually goes away

Most conventional construction-to-permanent loans run 10% to 20% down, though the exact figure depends on the lender, your credit, and whether it's a primary or second home. If you put down less than 20%, you'll carry PMI, but unlike FHA that insurance cancels as you build equity. If you already own the lot, its equity can count toward your down payment.

The biggest practical difference is mortgage insurance. FHA has an upfront premium plus annual MIP that usually stays for the life of the loan, but allows as little as 3.5% down with lower credit. Conventional needs more down and better credit, but has no upfront premium and its PMI cancels. For a buyer with decent credit and some equity, conventional is often the lower long-term cost. Because we're a brokerage, we run both side by side.

The product we focus on is a single-close, construction-to-permanent loan. You close once, build with staged draws, and the loan converts to a standard conforming mortgage when the home is finished — no second application and no separate refinance. Some lenders only offer a two-close structure, so we specifically shop for the single-close option.

No. Unlike USDA, conventional financing has no household income caps. That makes it the natural fit for move-up buyers and higher earners who'd be over the USDA limit but still want a single-close construction loan with cancellable mortgage insurance.

Often, yes — depending on the lender's guidelines. Conventional is one of the few construction programs that can finance a second home, not just a primary residence, which matters for a wine-country or coastal getaway build in Northern California. Down-payment and occupancy rules are stricter for a second home, so we confirm the specific lender's overlays before you commit.

Most conventional construction loans want a minimum score around 620, but construction lenders often apply overlays above that, and the best pricing shows up at 740+. Conventional pricing is risk-based, so a stronger score meaningfully lowers your rate. If your score is on the edge, we'll compare conventional against FHA and VA construction options.

Conventional construction loans have to fit within the annual conforming loan limit for your county, set by the Federal Housing Finance Agency. High-cost California counties carry higher limits than most of the country, and Sonoma County sits in its own tier. We confirm your county's current figure before you lock, and if your build runs above it, we'll look at a jumbo construction option.

In stages, called draws, tied to completed phases and inspections — foundation, framing, and so on. During construction you typically pay interest only on the funds that have actually been drawn, not the full loan, which keeps your payment lower while the home goes up. When the final inspection clears, the loan converts to your permanent mortgage.