Hi. Birkin here. I have two jobs: supervise treats and help humans simplify things that sound complicated.
“Construction loan” is one of those phrases that makes people assume the process is impossible unless you have unlimited money, unlimited patience, and a contractor who texts back within 3 minutes. The truth? It’s more straightforward than you might expect.
Let’s bust the three most common construction loan myths we hear, so you can decide if building is a real option for you.
Myth #1: "Construction loans are only for people with a massive down payment."
Reality: Construction loans often require more money down than a standard purchase loan, but “massive” is not a universal rule.
Down payment requirements can vary based on the lender, the program, your credit and income profile, and the details of the build. In some cases, land equity can help. If you already own the lot, that value may be able to offset part of what you’d otherwise need to bring in cash (depending on the loan program and how the land is titled/financed).
What to know: Down payment requirements vary, and the goal is clarity upfront. Think of it like my treat budget: we’re not guessing, we’re mapping out what’s needed for your build and what options you can use to get there.
Myth #2: "You get all the funds upfront, and you can change things anytime."
Reality: Construction financing is structured around a defined plan, and lenders do not typically hand you the full loan amount on day one.
Most construction loans work on a budget + timeline model. That means your plans, specs, and costs matter. The project is reviewed upfront, and the loan is set up with guardrails. Changes can happen, but they’re not always simple, because they can impact cost, timing, and approvals.
What to know: Construction loans run on a defined scope and budget, and changes can ripple into cost and timing. It’s like my daily walks: a little flexibility is fine, but the smoother builds start with a solid route and fewer surprise detours.
Myth #3: "It's just like a regular mortgage. You start paying the full payment right away."
Reality: Construction loans are typically funded in stages, and the payment structure during the build is often different than a traditional mortgage.
During construction, funds are usually released in draws as work is completed. That means the builder is paid in phases, not all at once. During the build, many borrowers make payments based on what has been drawn so far, which can look very different than a standard monthly mortgage payment.
What to know: The process is designed to match the build timeline, portioned and timed like my kibble. Funds are released in stages, and payments often reflect what’s been drawn, so it’s structured, not just guesswork.
A quick bonus myth Birkin hears a lot
Some buyers assume building always means two closings. Sometimes it does. Sometimes it doesn’t. There are construction loan structures that can be set up to reduce the number of times you close, depending on the program and the lender. Our One-Time Close (OTC) construction loan lets you close once upfront for both the construction phase and the permanent mortgage.
It's worth a quick conversation early so you’re not planning around the wrong version of the process.
Ready to build with less stress and confusion?
If you’re thinking about building in the Triad or surrounding area, the Sharpe Mortgage Team can help you understand how construction financing works, what the timeline typically looks like, and what you need from a builder to get started.
We’re here to help when you’re ready. Call (336) 575-9448 to get started today!
