Construction Loan
Short-term loan covering construction costs, converted to a permanent mortgage at completion.
A construction loan funds a project in stages ('draws') as work is completed and inspected. Most construction loans for ADUs and major remodels are 'construction-to-perm' — they automatically convert to a 30-year fixed mortgage when the certificate of occupancy is issued, so you only close once and pay one set of fees.
Typical terms in LA: 80–85% loan-to-completion-value, prime + 1–3% during construction, 6.5–8% on the perm portion (rates vary). Local credit unions (Logix, Wescom, USC) and several SoCal community banks are the best sources.
Related terms
People also ask
FAQ — Construction Loan
What does "Construction Loan" mean in plain English?
Short-term loan covering construction costs, converted to a permanent mortgage at completion. Browse the full construction glossary for related terms.
Why does Construction Loan matter for a California ADU or remodel?
Construction Loan comes up in the construction financing side of nearly every Greater LA and Bay Area project we touch. A construction loan funds a project in stages ('draws') as work is completed and inspected. Getting it right at design saves rework later — getting it wrong is one of the most common reasons permits stall. See how it lands in our five-phase process and the relevant field guides.
Where will I see Construction Loan on my own project?
Most owners run into Construction Loan during the design or plan-check phase — specifically inside schematic design or permit submittal. Your project manager flags it on the schedule, walks you through what the city expects, and confirms documentation is in place before the inspection that depends on it.
Does Construction Loan cost extra?
Sometimes — depends on whether it adds scope (a report, a structural detail, a fee) or just a paperwork step. Anything cost-impacting is itemized in your contract or change order, never buried in the invoice. Sanity-check your number with the ADU cost calculator and the 2026 cost report.
Who at Alpha Dream handles Construction Loan?
The project architect owns design-level decisions; the permit runner owns city interactions — see the California permit directory; the project manager owns field execution. You always know who to ask. Start a conversation on the contact page.
When does Construction Loan typically come up in the project schedule?
Most often during permit submittal or early construction. The full sequence is on the process page.
Is Construction Loan handled differently in LA vs the Bay Area?
Yes — local interpretation varies. The LA studio and Bay Area studio note the regional shifts on each city hub.
What documents prove compliance with Construction Loan?
City-specific — the California permit directory lists the form set per jurisdiction. Field journal entries show what actually clears plan check.
Which trades or consultants own Construction Loan on a typical job?
Architect, structural engineer, or Title 24 consultant — depends on the term. The process page maps roles across the five phases.
How does Construction Loan affect the project budget?
Direct line item in the contract when it triggers a report, detail, or fee. Pricing bands are in the 2026 cost report.
Has Construction Loan changed recently under California law?
California ADU and remodel law has shifted every legislative session since 2017. Material changes land first on the field journal; definitions update quarterly here.
Where can I read the underlying statute for Construction Loan?
Each glossary entry cites the relevant Gov Code, building code section, or city bulletin. The permit directorylinks the source portals.
Which ADU type is Construction Loan most relevant to?
Cross-references live on the ADU types index. The term often appears in detached ADU and JADU contexts most.
Can I send Construction Loan questions to your team?
Yes — use the contact page. We add the most-asked questions to the site-wide FAQ monthly.
What's a related term I should also read after Construction Loan?
Each entry cross-links 3–5 related terms. Browse the full set on the glossary index.
Plain EnglishOff-site · Leo replies tonight
Need "Construction Loan" explained against your project?
- Pull up your plans, we'll mark them up live
- No jargon, no sales pitch
- Free, even if you never hire us
Free · Phone or Zoom