Loan Comparison
A conventional mortgage funds a finished home in one lump sum at closing. A construction loan funds a home that does not exist yet, releasing money in stages as the build progresses. The structure, the interest, and the underwriting are all different — and knowing which you need shapes your whole timeline and budget.
| Construction Loan | Conventional Loan | |
|---|---|---|
| How funds are released | Draws at construction milestones | One lump sum at closing |
| Payments during the loan | Interest-only on drawn balance during construction | Full principal and interest from month one |
| Term | Short term (typically 12–18 months), then converts or refinances | 15–30 year fixed or adjustable |
| What is appraised | Future value based on plans and specs | Current value of the existing home |
| Down payment | Typically 20–25%, or land equity can count | As low as 3–5% |
| Documentation | Plans, budget, licensed builder contract, draw schedule | Standard income, asset, and credit documentation |
| Best for | Building new, major rebuilds, or custom homes | Purchasing a completed home |
Buying a finished home means conventional financing every time. Building means a construction loan — ideally a construction-to-permanent structure that converts to a long-term mortgage at completion so you only close and pay costs once. We structure both sides together so your permanent financing is locked in before you break ground.
Still Deciding?
We'll price both programs with your actual numbers and show you the payment, cash to close, and long-term cost side by side — no credit pull required.
Questions
Not for the build itself. Conventional financing requires a completed, habitable home. You use a construction loan during the build, then either convert it or refinance into a conventional mortgage once a certificate of occupancy is issued.
It is a single loan that funds construction in draws, then automatically converts to a long-term mortgage at completion. The advantage is one closing and one set of closing costs instead of two.
Usually yes. If you already own the lot, its equity typically counts toward your required down payment, which can substantially reduce or eliminate cash needed at closing.
About Us
CDL Mortgage Services Inc. is an independent, full-service mortgage company. Instead of pushing one bank’s products, we shop multiple wholesale lenders to secure the best loan at the best rate for every borrower.
Purchase, refinance, and home equity — all under one roof, focused on the best loans at the best rates.
Based at 6524 Lonetree Blvd, Rocklin, CA 95765 and licensed in California, Texas, Georgia, Tennessee, Oklahoma & Idaho.
Every file is handled start-to-finish by a licensed loan officer who knows your name and your goals.
Fully licensed and regulated, with award-winning lender partnerships and 35+ years serving borrowers.
Ready When You Are
One application, multiple wholesale lenders, and a licensed loan officer who explains the tradeoffs before you commit.