How to Finance a Custom Home in Seattle
By Eric Dexter, Owner & Builder ·
Financing a home you're building works differently than buying one that already exists — there's no finished house to mortgage yet, so you fund the construction itself. Here's the plain-English landscape. (Quick disclaimer: we're builders, not lenders — this is general education, so confirm specifics with a mortgage professional.)
Why building is financed differently
With a purchase, you get one mortgage on a finished home. With a build, the money is released in stages as the work progresses, then converts to (or is replaced by) a permanent mortgage once the home is complete.
Common ways to finance a custom home
Construction loan
A short-term loan that funds the build in draws, then is refinanced into a standard mortgage at completion. You typically pay interest only on what has been drawn.
Construction-to-permanent loan
One loan that covers construction and then automatically converts to your long-term mortgage — a single closing, which many homeowners prefer.
Lot loan
If you don't own the land yet, a lot (or land) loan finances the purchase, and can later be rolled into your construction financing.
Home equity or cash
If you already own the lot or a home with equity, a home-equity product or cash can fund part or all of the build — sometimes blended with a construction loan.
What lenders look at
- A clear set of plans and a realistic, line-item budget
- A qualified, licensed builder behind the project
- Your credit, income and down payment or land equity
- The projected appraised value of the finished home
Where DIGS fits
We don't lend, but we make financing far easier by giving your lender the two things they want: an honest, all-in budget and a real scope of work. Learn about building a custom home with DIGS, estimate your build with the cost calculator, or get in touch and we'll help you put solid numbers in front of a lender.
