Financing the construction of a new home is more challenging than obtaining financing for a conventional home purchase. Particularly in the current financing market, begin to search for financing early. Work with a mortgage broker that specializes in, or is at least familiar with, the unique loan products that cover home construction lending.
These loans cover your construction, and then convert into a permanent mortgage without a second closing. This is a special product called a CTP, or construction to permanent, loan designed particularly for the needs of individuals building homes. As you build your home, it serves as a credit line, from which you write checks for your lot and construction costs. You will typically make interest-only payments during the construction phase.
Some individuals find that two separate loans work better for their situation. Explore your options with a mortgage professional to ensure you are getting the best possible product for you specific needs.