Buy the house you want. Build the house you need.
Most buyers think they need cash on hand to renovate, or that building a custom home means two separate loans. Neither is true. There's a single mortgage that wraps the project cost into your financing from day one.
Two Paths
Which one fits your project?
The difference comes down to what you're starting with: an existing home that needs work, or a lot where you're building from scratch.
Renovation Loans
Fix it up. Finance the work into your mortgage.
You found a home that's close but not quite right. Outdated kitchen, bad layout, needs a new roof, or you want to add a bedroom. Instead of buying and then scrambling for a separate loan to renovate, a renovation loan wraps the purchase price and the project cost into one mortgage based on the home's after-renovation value.
Project scope
Construction Loans
Build from the ground up. One loan, one closing.
You have land (or you're buying it) and you want to build a custom home. A single-close construction loan finances the entire build and automatically converts to a permanent mortgage when construction is complete. One application, one closing, one set of closing costs. No requalification at the end.
Project scope
Side by Side
Renovation vs. Construction at a glance.
How the Money Flows
You don't get a lump sum. Here's how draws work.
Both renovation and construction loans release funds in stages called "draws." As your contractor completes each phase of work, an inspector verifies the progress, and the next portion of funds is released. This protects you, the lender, and the project.
Contractor completes a phase
Demolition, framing, rough-in, drywall, finishes... each milestone is defined in the contract.
Inspector verifies the work
A third-party inspector confirms the work matches the scope and is up to code before funds are released.
Funds released to contractor
The next draw is disbursed directly to the contractor. This repeats until the project is complete.
Final inspection + completion
Once all work is done and inspected, the final draw is released. For construction loans, this is when the loan converts to permanent financing with your locked rate (or float-down).
The draw process protects you from scope creep, abandoned projects, and budget overruns. Every dollar is verified before it moves.
Not Sure Which One?
Quick decision guide.
Go renovation if you're buying (or refinancing) an existing home and the project scope is defined: new kitchen, bathroom remodel, adding a room, roof replacement, accessibility modifications, or cosmetic updates.
Go construction if you own (or are buying) land and want to build a custom home from the foundation up. Also applies to teardowns where you're starting over.
Not sure about scope or budget? Start with a Clarity Call. I'll look at the property, the project, and your financing options to figure out which program fits and what the numbers actually look like.
Let's Build
Tell me about the project. I'll tell you how to finance it.
Renovation scope, construction budget, lot details, contractor status... bring whatever you have. I'll map out the right program, the draw schedule, and the real cost.
Christian Kosko | NMLS# 1415795 | Fairway Independent Mortgage Corporation
NMLS# 2289 | Equal Housing Lender | Licensed in DC, MD, VA
Renovation and construction loan programs are subject to property eligibility, contractor/builder approval, borrower qualification, and program availability. Not all programs are available in all areas. Draw schedules, project timelines, and loan terms may vary. This page is for educational purposes only and does not constitute a loan approval or commitment. All loans subject to underwriting approval.