Construction Loan Timeline Guide

Blog
May 25, 2026

A $550,000 new build financed with a 10% down construction-to-permanent loan means a $495,000 loan amount. If your rate ends up 0.50% higher because a build runs long and you have to re-lock, the principal and interest payment can rise by about $156 a month. Over five years, that is roughly $9,360 in added payments. That is why a construction loan timeline guide matters – not as theory, but as a way to protect cash flow, reserves, and closing certainty.

By Duane Buziak, Mortgage Maestro, NMLS#1110647

In Glen Allen and across Henrico County, timing matters because land, labor, inspections, and appraisal turn times do not always move in sync. A borrower can be fully qualified and still lose weeks if plans are incomplete, permits lag, or the builder draw schedule does not match lender requirements. For buyers trying to build near Short Pump, Wyndham, or west Henrico growth corridors, understanding the sequence upfront is often the difference between a controlled process and a costly one.

Henrico County home values remain high enough that loan structure matters. Median listing prices in Henrico County have recently tracked in the mid-$400,000s on major housing portals, while many custom and semi-custom new builds in western Henrico can run materially above that depending on lot cost and finishes. For standard conforming loans in 2025, the baseline conforming limit for a one-unit property is $806,500. If your project pushes above that after land, hard costs, and contingency, jumbo rules may apply, and those rules can tighten reserve and credit expectations. Market data changes, so buyers should confirm current figures directly with sources such as https://www.zillow.com/home-values/ and conforming loan updates at https://www.fhfa.gov/.

Construction loan timeline guide: the real sequence

Most borrowers think the loan starts when they sign a contract with a builder. In practice, the timeline usually starts earlier, with prequalification and project feasibility. A soft-pull prequalification can help estimate buying power without impacting credit, but full underwriting for construction financing is much more document-heavy than a resale purchase.

A typical construction timeline runs 6 to 12 months from planning to completion, with financing approval often taking 30 to 60 days before the first draw. Simpler projects on owned land may move faster. Custom homes with land acquisition, well or septic review, or specialty plans often run longer.

Phase 1: Prequalification and project review

This phase usually takes a few days to two weeks. The lender reviews income, assets, debts, credit, and the broad project profile. Many programs want at least a 680 credit score, while stronger pricing and more flexibility often start at 700 to 720. Some lenders will consider lower scores, but that can come with higher down payment requirements, more reserves, or tighter debt-to-income caps.

Borrowers should also expect reserve discussions early. A common benchmark is 6 to 12 months of housing payments in reserves for higher-balance or more complex files, though exact requirements depend on occupancy, loan size, and program.

Phase 2: Builder, plans, and budget approval

This is where many timelines stretch. Expect 2 to 4 weeks, sometimes longer. The lender needs the builder license information, insurance, executed contract, plans, specifications, and a line-item cost breakdown. If the builder is not already approved with the lender, builder vetting can add time.

This phase is also where contingency matters. Many lenders want a contingency reserve of 5% to 10% of construction cost because materials and labor can move during the build. If your budget is thin from day one, small change orders can create real closing risk.

Phase 3: Appraisal and underwriting

This usually takes 2 to 4 weeks. The appraiser values the property based on plans and specs, often called an as-completed value. Underwriting then reviews both borrower strength and project viability. Expect questions about land value, source of down payment, contractor experience, and whether the draw schedule aligns with the build plan.

For consumer protections on mortgage estimates and closing disclosures, the CFPB remains a useful reference at https://www.consumerfinance.gov/owning-a-home/.

Phase 4: Closing and initial draw

Closing usually lands 1 to 2 weeks after final approval. Closing costs often run about 2% to 5% of the total loan amount, though construction loans can include added inspection, title, recording, and draw administration costs. If you are financing land plus construction, cash-to-close can be meaningfully higher than borrowers expect.

Phase 5: Construction period and draw inspections

This is the longest phase, often 4 to 9 months for many single-family projects, and longer for custom builds. Funds are disbursed in draws after inspections confirm progress. Common stages include foundation, framing, rough-ins, drywall, and completion. Inspection timing matters because a delayed draw can delay subcontractor payment, which can slow the next phase of the build.

Phase 6: Conversion to permanent financing

With a one-time close construction-to-permanent loan, the loan typically modifies into the permanent phase after completion and final documentation. With a two-time close, you may need a second closing. That adds more exposure to market rates and qualification changes.

Comparison table: what affects the timeline most?

6-step implementation roadmap

Start with a realistic budget, not just a target home price. Include land, site work, permits, contingency, and interest carry.
Get prequalified and ask whether the scenario fits conforming, jumbo, or specialized construction guidelines.
Choose a builder who can provide a complete contract, timeline, insurance, and detailed cost breakdown quickly.
Build in reserve strength before underwriting. Large deposits shortly before application can create sourcing issues.
Review the draw schedule line by line so it matches actual construction sequencing and subcontractor expectations.
Plan for delays. Rate lock extensions, permit lag, weather, and change orders are common, not rare.

Construction loan timeline guide for Glen Allen borrowers

Local borrowers often ask whether building is faster than competing for resale inventory. Sometimes yes, but only if the lot is ready and the builder package is complete. In parts of Henrico County, the actual friction point is not underwriting. It is site readiness, county approval timing, or the gap between a builder’s standard contract and a lender’s documentation needs.

That also explains why comparing lenders only on rate can be misleading. Some retail lenders and large call-center lenders may offer competitive pricing but move less efficiently on custom builder approvals or draw administration. Brokers and local construction-focused lenders often add value by identifying the timeline risks early. That is not a claim that one model is always better than another. It depends on the project, builder, and whether your file is plain-vanilla or complex.

FAQs

How long does a construction loan usually take?

From application to completion, many projects run 6 to 12 months. Loan approval before closing is often 30 to 60 days if documents are complete.

What credit score do you need?

Many construction programs prefer 680 or better. More competitive terms often start above 700, especially for larger balances or custom builds.

How much down payment is typical?

Many owner-occupied construction loans require 10% to 20% down, though land equity can sometimes count toward the requirement if supported by the program.

Are reserves required?

Often yes. A common expectation is 6 to 12 months of the full housing payment, particularly for jumbo or more layered files.

What causes the biggest delays?

Incomplete plans, builder approval issues, permit timing, appraisal revisions, and draw inspection bottlenecks are the most common.

Is a one-time close better than a two-time close?

It depends. One-time close can reduce repeat closing costs and rate exposure. Two-time close can offer flexibility if the permanent financing plan may change later.

Can closing costs be higher than a normal mortgage?

Yes. In addition to ordinary lender, title, and recording charges, construction loans may include inspection, draw, and administrative fees.

Where can borrowers verify program rules?

For consumer mortgage disclosures, use https://www.consumerfinance.gov/. For FHA building and renovation guidance, HUD resources are available at https://www.hud.gov/.

This article is for educational purposes only and does not constitute financial or legal advice.

A good construction timeline is really a cash-management plan with deadlines attached. If the builder, borrower, and lender are all working from the same calendar, surprises still happen – but they are usually smaller, cheaper, and easier to solve.