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.
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FAQ — Construction Loan
What does "Construction Loan" mean in plain English?
Short-term loan covering construction costs, converted to a permanent mortgage at completion.
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.
Where will I see Construction Loan on my own project?
Most owners run into Construction Loan during the design or plan-check phase. 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.
Who at Alpha Dream handles Construction Loan?
The project architect owns design-level decisions; the permit runner owns city interactions; the project manager owns field execution. You always know who to ask.