Construction loans in Sacramento - financing the home you'll build.
Building new in Sacramento, Placer, or El Dorado County? A construction-to-permanent loan finances your lot, your build, and converts to a regular mortgage at completion - one close, one set of fees. I'll walk you through draw schedules, builder requirements, and what lenders actually want to see.
Short answerA construction-to-permanent loan in Sacramento finances your lot and your build, then converts to a permanent mortgage at completion with one closing. Expect 20-25% down of total project cost, a 680+ credit score, interest-only payments on drawn funds during the build, and a 9-14 month timeline.
Construction loans in Sacramento at a glance
- Down payment
- 20%-25% of total project cost (lot equity can count)
- Minimum credit score
- 680+ (best terms at 720+)
- Closings
- One (construction-to-permanent)
- Payments during build
- Interest-only on drawn funds, 6-12 months
- Construction-period rate
- Typically 0.5%-1% above the permanent rate
- Typical timeline
- 9-14 months from groundbreaking to keys
Why Sacramento buyers choose Construction.
Is Construction right for you?
- Buyers who own a lot in Placer, El Dorado, or Sacramento County and want to build a primary residence.
- Move-up buyers selling a current Sacramento home and rolling proceeds into a new build.
- Anyone who wants a true custom home and has a licensed General Contractor lined up.
- Buyers comfortable with a 9-14 month timeline from groundbreaking to keys.
The Construction loan process, step by step.
- 01Pre-Approval & Plan ReviewStandard income/credit/asset review, plus lender review of your plans, specs, and contractor bid. Typically 1-2 weeks.
- 02Appraisal of Future ValueAppraiser values the home as if it were already built, based on plans and the local Sacramento comps.
- 03Close & Begin ConstructionOne closing. Lot funds (if applicable) disburse. Construction draws begin per a 4-6 stage schedule tied to inspections.
- 04Convert to PermanentAt final inspection and certificate of occupancy, the loan automatically converts to your permanent mortgage - fixed or ARM, your choice locked at the start.
Construction loans in Sacramento - FAQs.
How much down payment do I need for a construction loan?+
Typically 20-25% of total project cost (lot + construction). If you already own the lot free and clear, that equity often counts toward the down payment.
What credit score do I need?+
Most construction lenders want 680+, with the best terms at 720+. The credit standard is stricter than a regular purchase because the lender is taking on construction risk.
Can I act as my own General Contractor?+
Most lenders require a licensed, insured GC with a verifiable track record. Owner-builder loans exist but are rare and expensive in the Sacramento market.
What rate will I get during construction?+
Construction-period rates are typically 0.5-1% above the permanent rate. The permanent rate is locked at closing so you know your long-term payment from day one.
Do construction loans work for ADUs?+
Yes - ADU-specific construction loans and renovation loans like FHA 203(k) or Fannie HomeStyle can finance accessory dwelling units on an existing Sacramento property. Different product, similar principles.