Construction Loans

The financing gap

No source publishes construction loan rates or draw schedules

Start with what is missing. No authoritative source publishes a typical construction loan rate, a typical draw schedule, or a typical number of draws. This guide could not source any of the three, and neither can the pages that quote precise-looking figures for all of them. Treat anything you read on those points as a lender's own sheet or an aggregator's guess.

What is published is the price side. Census breaks the 2025 median contract price for contractor-built houses out by how the owner paid: $399,100 with conventional financing, $278,100 FHA insured, $501,600 VA guaranteed and $396,000 cash, against an all-methods median of $404,000¹. Every one of those figures excludes the value of the improved lot¹.

One more published fact is worth carrying into a lender conversation. A builder's own financing cost already sits inside a spec house price. NAHB's 2024 survey puts financing cost at $10,220 on an average $665,298 sale price, with further financing cost folded into the $91,057 finished lot line². Buy a finished house and you pay for the builder's construction loan. Build on your own land and you carry that loan yourself.

Six things the published data can tell a borrower

None of this is a rate quote. It is the part of construction financing that federal and industry data actually covers, plus a clear marker showing where the data stops.

What financing type says about price

Census reports 2025 median contract prices by financing method: $399,100 conventional, $278,100 FHA insured, $501,600 VA guaranteed and $396,000 cash¹. These are medians of the houses actually built under each method, not a statement about what any method costs to borrow. Relative standard error on the $404,000 all-methods total is 4 percent¹.

The FHA and VA figures sit far apart

The gap between the FHA insured median of $278,100 and the VA guaranteed median of $501,600 is the widest split in that table¹. Census reports the prices and not the reasons. Do not read either number as a lending limit or a program cap, because the series measures contract prices of houses that got built.

The builder's loan is inside a spec price

NAHB's 2024 survey lists financing cost at $10,220 on an average sale price of $665,298, and describes its $91,057 finished lot line as including financing cost². That study rests on 41 usable responses from 4,000 builders emailed and is national only. Buying finished means paying someone else's carry.

Draws track stages, and stage costs are published

If your lender releases money against completed stages, the only published stage costs are NAHB's averages: site work $32,719, foundations $44,748, framing $70,982, exterior finishes $57,510, rough-ins $82,319, interior finishes $103,391, final steps $27,710 and other $8,835, totalling $428,215². No source publishes typical draw percentages.

Regulation lands during the loan window

NAHB estimates that regulation adds $131,734 to a new single-family home, split between $84,939 imposed during construction and $46,795 carried in the higher price of the finished lot³. The construction-period share falls inside the window your loan is open, which is the part a borrower feels as carry rather than as purchase price.

Where the published data stops

No authoritative source gives a construction loan rate, a draw schedule, an inspection cadence, a contingency percentage or a conversion fee. Census publishes no figure this guide could source for time from contract signature to move-in either, so even loan term is not something you can benchmark. Get all of it from your lender in writing.

Published construction loan ratesNone from any authoritative source

Median contract price, conventional$399,100, lot excluded

What does it cost?

No authoritative source publishes construction loan rates, points, draw counts, inspection fees or conversion costs, and this guide will not invent them. What drives your number is the loan amount, the rate your lender quotes, how long the loan stays open and how much of the balance is drawn early. Only the first of those has a published anchor. The 2025 median contract price for a contractor-built house was $404,000 excluding the improved lot, with an average of $576,500¹.

By financing method, the 2025 medians were $399,100 conventional, $278,100 FHA insured, $501,600 VA guaranteed and $396,000 cash¹. Add your land cost to any of them, because none includes the lot. Two further published figures affect the total you will finance. NAHB puts the regulatory share at $131,734 per new single-family home, of which $84,939 is imposed during construction rather than on the lot³. Its own average house carried $10,220 of builder financing cost inside a $665,298 sale price². Both NAHB figures come from 41 usable responses and are national only.

Price figures are Census Bureau Survey of Construction 2025 medians and averages that exclude the value of the improved lot, and the two NAHB figures are national averages from a 41-response survey; no rate, fee or draw figure appears here because no authoritative source publishes one.

Hiring

How to hire when a construction loan is involved

1

Who does the work

Three parties have to agree. Your lender funds in stages against inspections, your builder performs those stages, and a title company or closing agent usually handles disbursement. The builder you choose has to be one your lender will approve and pay, which narrows the field before price does. Ask every builder you shortlist which lenders have funded their draws before.

2

What pros will ask

A construction lender will want the executed builder contract, the plans and specifications, a cost breakdown by stage, proof that you own the land or are closing on it, an appraisal, and the builder's licence and insurance. Builders will ask which lender you are using and whether draws are inspected. No published series benchmarks how long any of it takes.

3

What to check before signing

Get three things in writing: how many draws there are and what triggers each one, who pays for inspections and reinspections, and what happens if the build runs past the loan term. Confirm whether the contract price includes the lot, since the Census contract series excludes it and lenders size loans differently on that basis¹. Confirm who funds change orders.

Construction financing questions, answered straight

What rate should I expect on a construction loan?

No authoritative source publishes one, and this guide will not guess. Construction lending is priced loan by loan and lender by lender, and no federal series or industry survey available for this guide tracks a median or a typical spread. Any page quoting a precise national construction loan rate is either reporting one lender's own sheet or has no source at all. Get written quotes from at least two lenders and compare the rate, the fee schedule and the conversion terms together rather than separately.

How large should the loan be?

Size it from your contract rather than from a national median, but the anchors are useful. Census reports a 2025 median contract price of $404,000 for a contractor-built house and an average of $576,500, both excluding the improved lot¹. Median contract price per square foot was $171.57⁴. Then add your land, your site work and whatever contingency your lender requires. NAHB separately estimates that $84,939 of regulatory cost falls during construction rather than on the lot, which lands inside the financed window³.

How does a draw schedule work?

Money is released as work is completed and verified rather than as a lump sum at closing. No authoritative source publishes typical draw counts or percentages, so treat the schedule as negotiable rather than standard. What is published is the shape of the spend. NAHB's stage averages are site work $32,719, foundations $44,748, framing $70,982, exterior finishes $57,510, rough-ins $82,319, interior finishes $103,391, final steps $27,710 and other $8,835². Interior finishes is the largest single stage and it arrives near the end of the job.

Do I need a construction loan to buy a finished house from a builder?

No. Buying a completed house is a mortgage on an existing asset, and the builder's construction financing is already priced into what you pay. NAHB's 2024 survey lists $10,220 of financing cost on an average $665,298 sale price, and describes its $91,057 finished lot line as including financing cost². Those figures come from 41 usable responses out of 4,000 builders emailed, are national only, and NAHB advises against comparing them across years.

How long will the loan need to run?

No reliable published answer exists. Census maintains a length-of-time series for construction, but no file for it could be sourced for this guide, so there is no figure here for time from contract signature to move-in. What you can see is throughput. Single-family starts ran at a seasonally adjusted annual rate of 895,000 in June 2026 and single-family completions at 964,000⁵. Set the loan term from your builder's written schedule, and ask what an extension costs before you sign anything.

Sources

Where these facts came from

Every figure on this page was read out of the page linked below. We do not cite cost aggregators.

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