CONSTRUCTION & RENOVATION FINANCING
Financing for Building, Renovating, or Improving Real Estate
Building or renovating a home often calls for a different type of loan. The same may apply when improving an investment property.
Construction and renovation financing is designed for properties that are being built, substantially improved, or transformed.
Platinum Lending Solutions helps borrowers and investors in Oregon and Washington compare these loans. We review the property, project and budget, along with your long-term plans.
Construction Loans vs. Renovation Loans
Although the terms are sometimes used together, construction and renovation loans generally serve different purposes.
Construction Loans
Construction loans are typically used when building a new home or completing a major construction project.
These loans are designed around a property that is being constructed rather than one that is already complete.
Renovation Loans
Renovation loans are designed for an existing property that needs repairs, remodeling, modernization, or substantial improvements.
Depending on the program, renovation financing may be available when purchasing a home that needs work or improving a property you already own.
Investor Financing
Investor projects may require financing that works differently from a traditional residential mortgage.
Fix-and-flip loans are generally short-term, business-purpose financing for investment properties being acquired, renovated, and resold.
Turn Your Plans Into Possibilities
Whether you’re building a custom home or renovating an existing property, the right financing can help bring your project together.
Understanding the financing early can help you establish a realistic budget and identify potential requirements before construction begins.
Construction & Renovation Loan Options
Explore financing options based on the type of property, project, and long-term goal.
New Construction Loans
New construction financing can help qualified borrowers build a home rather than purchase an already completed property.
Depending on the program, you may be able to:
- Build on land you own.
- Buy land and build a home.
- Build a custom primary residence.
- Finance eligible construction costs.
Construction funds are generally released in stages as work is completed.
Construction-to-Permanent Loans
A construction-to-permanent loan, sometimes called a one-time-close construction loan, combines construction financing and the permanent mortgage into one loan structure.
Qualified borrowers may be able to establish both phases of financing through a single closing.
Programs can differ in rate structure, lock provisions, construction requirements, and permanent financing terms.
Renovation Loans
Renovation financing may allow qualified borrowers to finance eligible improvements to an existing home.
Eligible work may include:
- Kitchen and bathroom remodels.
- Additions and structural repairs.
- Changes that improve access or energy efficiency.
- Updates to major home systems.
- Whole-home renovations.
Fix & Flip Investor Loans
Real estate investors purchasing properties to renovate and resell often need financing that works differently from a traditional residential mortgage.
Fix-and-flip loans are generally short-term, business-purpose financing designed around the acquisition, renovation, and eventual sale of an investment property.
Lenders may review the purchase price, repair budget and property value before and after repairs. Your experience, cash reserves and project timeline also matter. They may also review how you plan to repay the loan.
Jumbo Construction Loans
Custom homes and higher-value construction projects may require financing above conventional conforming loan limits.
Jumbo construction loans may provide financing options for qualified borrowers building higher-cost or custom homes that require larger loan amounts.
Borrowers should evaluate qualification requirements, reserves, down payment or equity requirements, land treatment, draw procedures, rate terms, and permanent financing.
How Construction & Renovation Financing Works
Construction and renovation financing typically involves more moving parts than financing an already completed home.
Although requirements vary by lender, loan program, and project, several components are commonly evaluated.
1
Borrower or Investor Qualifications
2
Land and Property
3
Builder or Contractor
4
Plans, Scope & Budget
5
Appraisal & Valuation
6
Draw Schedule
Upgrade Your Space. Increase Your Possibilities.
Renovation financing may help qualified borrowers make eligible improvements to a property they are purchasing or already own.
Programs vary significantly in the types of improvements permitted, contractor requirements, appraisal methods, and how renovation funds are distributed.
If you already have a mortgage, compare the new financing with your current loan. Consider your equity, project cost and long-term plans.
Do You Need to Own the Land Before Getting a Construction Loan?
Not necessarily.
Depending on the loan program, you may be able to build on land you already own or buy land as part of the transaction. If you have equity in the land, it may help support the financing.
How land value and equity are treated depends on the specific program, property, and transaction.
Why Explore Financing Early?
Understanding your financing options early can help establish:
• A realistic total project budget
• Potential down payment or equity requirements
• Builder or contractor requirements
• Reserve or liquidity requirements
• How land equity may be treated
• How construction or renovation draws will work
• What documentation may be required
• What happens when construction is complete
Construction & Renovation Financing in Oregon & Washington
Every project is different. Location, land, building costs and permits affect the budget. The type of property, planned work and project team matter too.
Local permit and building rules vary by city and county in Oregon and Washington. Review the rules for your project’s location early.
As an independent mortgage brokerage, Platinum Lending Solutions can compare construction and renovation programs from multiple lenders. We serve Oregon and Washington.
Our role is to help you understand available financing structures, compare appropriate options, and determine which approach aligns with both the project and your longer-term mortgage or investment strategy.
Explore Your Construction & Renovation Financing Options
Make financing part of your plan from the start. This applies whether you are building a home, renovating or improving an investment property.
Platinum Lending Solutions can help you evaluate available options and understand what may be required before you move forward.
Construction & Renovation Loan FAQs
Answers to common questions about construction and renovation financing.
What is a construction loan?
A construction loan is financing designed to help fund the building of a home or another eligible residential construction project. Funds are generally released in stages as construction progresses.
What is a renovation loan?
A renovation loan is financing that may allow eligible improvement costs to be incorporated into the financing of an existing property, depending on the loan program.
What is a fix-and-flip loan?
A fix-and-flip loan is generally short-term, business-purpose financing for a real estate investor acquiring a property to renovate and resell.
Is a fix-and-flip loan the same as a renovation loan?
No. Residential renovation financing and business-purpose fix-and-flip financing serve different purposes.
Can I use a construction loan if I already own the land?
Potentially. Existing land value or equity may be considered when structuring certain construction loans.
Can I finance the land and construction together?
Some construction financing programs allow qualified borrowers to purchase land and finance construction as part of the same transaction.
Can a fix-and-flip loan include renovation costs?
Depending on the lender and program, fix-and-flip financing may include eligible renovation costs along with financing for the acquisition of the investment property.
Can renovation costs be included when buying a home?
Certain renovation mortgage programs allow qualified borrowers to finance both the purchase of a property and eligible renovation costs.
Do construction loans require a larger down payment?
Requirements vary according to the loan program, borrower qualifications, land equity, property type, project, and lender.
Can I act as my own general contractor?
Some construction loan programs require an approved professional builder or general contractor and may limit owner-builder arrangements.
How are construction and renovation funds distributed?
Funds are commonly distributed through a draw process as designated stages of work are completed and applicable lender requirements are satisfied.
Can I lock my permanent mortgage rate before construction is complete?
Possibly. Rate-lock options depend on the lender and loan structure. Construction-to-permanent programs can have different rate and lock provisions.
