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Photo of a new building under construction

New Construction & Vacant Land Loans

Q: How does a construction loan work at Royal Credit Union?

Royal's construction loan provides up to a 9-month building period. During construction, borrowers make interest-only payments. Once construction is complete, the loan converts into a conventional fixed-rate or adjustable-rate mortgage, allowing borrowers to manage a single loan throughout the construction and permanent financing process.

Q: What rate lock options are available for Royal's construction loans?

Rate lock options depend on the type of mortgage selected for permanent financing. Borrowers choosing a 10/6 adjustable-rate mortgage may lock their permanent financing rate at the start of construction. Borrowers selecting a fixed-rate mortgage can lock their rate after construction is complete based on rates available at that time.

Q: Does Royal Credit Union offer one-time or two-time closing for construction loans?

Yes. Royal offers both one-time and two-time construction loan closing options. A one-time closing combines the construction loan and permanent mortgage into a single closing, which may reduce closing costs and simplify the process.

Q: Can I include a land purchase in my construction loan?

Yes. If you do not already own the property where you plan to build, the cost of purchasing the land can be included in your construction loan. This can help avoid the need for separate financing and additional closing costs.

Q: What vacant lot and recreational land loan options does Royal Credit Union offer?

Royal offers financing for vacant lots intended for future construction as well as recreational land such as hunting property. Agricultural land and land used primarily to generate income are not eligible. Available financing options include 3-year and 5-year adjustable-rate mortgages.

Q: What happens if construction costs increase during my building project?

If construction costs increase, Royal may be able to finance cost overruns if sufficient project equity exists. In other situations, borrowers may need to use personal funds to cover additional expenses. Discussing potential cost increases with your mortgage loan officer before construction begins is recommended.

Take your dream beyond a blueprint with a construction or vacant land loan

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When you want to build a home, a construction loan from the home loan experts at Royal Credit Union is the answer.

Royal offers construction loans for building your dream home or building a second home
You can include the cost of a land purchase if you do not already own the property where you are building
Land loans for vacant lots or recreational land are also available

Construction Loans

Our construction loan allows a building period of up to 9 months. During the construction period, borrowers pay only the interest on their construction loan.
When construction is complete, the loan converts to a conventional fixed-rate or adjustable-rate mortgage.
We offer flexible rate lock options:
- If you choose a 10/6 adjustable rate mortgage, you can lock your permanent financing rate at the start of construction.
- If you choose a fixed-rate mortgage as your permanent financing, you can lock your rate after construction is complete. You will be able to lock at Royal's rates that are current at the time construction is complete.
One-time or two-time closing is available, depending on your needs

Vacant Lot Or Recreational Land Loans

We offer financing to purchase empty lots for future construction as well as land for recreational purposes like hunting
Agricultural land and other types of land used to provide income are not eligible for land loans
Financing options for land loans include 3-year and 5-year adjustable-rate mortgages

Mortgage Loan Calculators

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Frequently Asked Questions

What types of construction and land loans does Royal Credit Union offer?
Royal Credit Union provides flexible lending options for building and buying land. Royal offers construction loans for building your dream home or building a second home. You can include the cost of a land purchase if you do not already own the property where you are building. Land loans for vacant lots or recreational land are also available. Whether you're starting from scratch or already have a lot, Royal's home loan experts can help.

How does a construction loan work at Royal Credit Union?
Royal's construction loan allows a building period of up to 9 months. During the construction period, borrowers pay only the interest on their construction loan. When construction is complete, the loan converts to a conventional fixed-rate or adjustable-rate mortgage. This means you only manage one loan from the building phase through permanent financing, simplifying the entire process.

What rate lock options are available for Royal's construction loans?
Royal offers flexible rate lock options depending on your mortgage type. If you choose a 10/6 adjustable rate mortgage (ARM), you can lock your permanent financing rate at the start of construction. If you choose a fixed-rate mortgage as your permanent financing, you can lock your rate after construction is complete. You will be able to lock at Royal's rates that are current at the time construction is complete.

Does Royal Credit Union offer one-time or two-time closing for construction loans?
Both! A one-time closing combines the construction loan and permanent mortgage into a single closing, which can save you from incurring a second set of closing costs. Your mortgage loan officer can help determine which option works best for your situation.

Can I include a land purchase in my construction loan?
Yes, you can include the cost of a land purchase if you do not already own the property where you are building. This works well for most borrowers because they won't incur another set of closing costs to finance the land separately.

What vacant lot and recreational land loan options does Royal Credit Union offer?
Royal offers financing to purchase empty lots for future construction as well as land for recreational purposes like hunting. However, agricultural land and other types of land used to provide income are not eligible for land loans. Financing options for land loans include 3-year and 5-year adjustable-rate mortgages.

What happens if construction costs increase during my building project?
If you have enough equity in the project (meaning you've put enough money down), Royal Credit Union can potentially finance overruns. Other times, borrowers rely on a cushion of their own funds to pay for these added costs. It's a good idea to discuss potential cost increases with your mortgage loan officer before construction begins.