Financing a custom build works differently than buying an existing home. The bank isn't lending on a finished property — it's lending on a project that doesn't exist yet, against your plans, our budget, and the eventual appraisal of the completed home. The right lender makes this smooth. The wrong one makes it painful.
The construction loan, in plain English
A construction loan funds the build in stages called draws. At signing, the bank approves a total loan amount based on appraised value of the future home. As we hit milestones — foundation poured, framed, dried-in, etc. — the bank releases funds in scheduled draws. You only pay interest on the amount drawn, not the full loan, during construction.
At certificate of occupancy, the construction loan converts to a permanent mortgage at the rates and terms locked in advance (with a one-time-close loan) or refinanced into a new mortgage (with a two-time-close loan).
One-time-close vs. two-time-close
One-time-close means you sign one set of loan documents at the start; it converts automatically. Less paperwork, rate locked early but with a long lock period (which usually costs a small premium in rate).
Two-time-close means you sign construction docs now and refinance into a permanent mortgage at completion. More paperwork, but you can shop rates at completion if rates have moved in your favor.
Most luxury builds we work on use one-time-close because the timeline simplicity is worth the small rate premium. But it depends on your situation and the rate environment.
What lenders look at
- Your debt-to-income ratio (typically need below 43%)
- Liquid reserves (lenders typically want 6+ months of mortgage payments in reserve plus down payment)
- Down payment (luxury construction typically requires 20%+; some specialty lenders go to 15%)
- Credit score (700+ for best terms, 740+ for premium pricing)
- The builder (us). Lenders want to see established builders with completed projects and clean lien records — we're well-known to local construction lenders.
- The plans + budget. The bank's own appraiser values the future home using our plans + spec sheet.
The Des Moines lenders we trust
We work regularly with several local and regional lenders who specialize in construction-to-permanent loans for luxury builds:
- Local credit unions with strong construction lending programs
- Regional banks with experienced construction-loan officers
- Specialty lenders for higher loan amounts or non-standard situations
We can introduce you to specific officers we've worked with. The right loan officer makes the difference between a smooth project and one where every draw is an argument.
The conversation we'll have
On our consultation, after we've talked through your project, we often spend a few minutes on financing. Where are you in the pre-approval process? Do you already have a relationship with a lender, or do you want introductions? Are you funding from sale of an existing home? From investments? From a combination?
Every family is different. We've seen all-cash builds, primary- construction-loan builds, blended approaches with home-equity bridge financing — every situation has a path. We just want to make sure the path is mapped before we break ground.
What we DON'T do
We're not lenders. We don't make loan recommendations beyond introducing you to officers we've worked with successfully. The loan you sign for is between you, your lender, and your CPA. We focus on making the build itself smooth so the lender's draw process is as easy as possible.