What Is a Construction Loan?

A construction loan is a specialized, short-term mortgage designed to finance the cost of building a home or completing major renovations. Unlike a traditional mortgage, where borrowers receive funds all at once at closing, construction loans distribute funds in phases—known as draws—based on the progress of the construction project.

Borrowers often use construction loans for:

• Building a custom home on purchased land
• Constructing a home in a new development
• Completing large-scale renovation or expansion projects
• Financing both the land and the construction costs
• Rebuilding or upgrading older properties in established neighborhoods

Because construction loans rely on the value of a home that does not yet exist, lenders require detailed plans, budgets, and inspections throughout the process. This ensures the project stays on schedule and within the approved financial scope.

Why Choose a Construction Loan in Colorado Springs?

Colorado Springs offers incredible opportunities for new construction. With a growing population and expanding development, many buyers prefer the customization and long-term value of building their own home.

Several factors make construction loans especially valuable here:

1. Strong New Construction Activity

From the fast-growing East Side and Falcon area to high-demand neighborhoods in northern Colorado Springs, new-build options are plentiful and appeal to buyers wanting modern designs and energy-efficient features.

2. Competitive Housing Market

With ongoing demand and limited resale inventory, building a home allows buyers to avoid bidding wars and secure the features they want from the beginning.

3. Growing Land Opportunities

Areas like Black Forest, Peyton, Calhan, and Fountain continue to offer land options for custom home projects.

4. Long-Term Appreciation

Colorado Springs continues to show stable long-term home value growth, making a newly built home a smart investment for the future.

Types of Construction Loans Offered by 719 Lending – Patty Galceran

At 719 Lending, we offer a variety of construction loan programs tailored to the needs of Colorado Springs homebuyers. Each option supports different project types, financial goals, and timelines.

Construction-to-Permanent Loan (One-Time Close)

This popular program combines the construction phase and permanent mortgage into one closing. Funds are drawn as the home is built, and once construction is complete, the loan automatically converts into a long-term mortgage. This option is ideal for borrowers looking for convenience and cost savings.

Stand-Alone Construction Loan (Two-Time Close)

A stand-alone construction loan finances only the building phase. After the home is complete, borrowers refinance into a permanent mortgage. This solution works well for buyers expecting changes in income, credit, or market conditions before finalizing the permanent loan.

Renovation Construction Loans

For buyers upgrading an existing home, renovation loans provide financing for major projects such as additions, structural updates, full-home remodels, or property restorations. This is especially helpful for properties in mature neighborhoods like Old Colorado City or downtown Colorado Springs.

Land & Lot Loans

Buyers who have found the perfect piece of land but aren’t ready to build immediately can use a land or lot loan. Once construction begins, this loan can be rolled into a full construction loan for a smooth financing transition.

How Construction Loans Work

The construction loan process is more involved than a standard mortgage, but with the right guidance, it becomes clear and manageable. At 719 Lending – Patty Galceran, we simplify each step and provide consistent communication from start to finish.

Step 1: Pre-Approval
We review income, credit, and project details to determine the loan amount you qualify for. Pre-approval helps you set a realistic budget and strengthens your position when choosing land or hiring a builder.

Step 2: Choose a Licensed Builder
Borrowers must work with licensed and insured builders who meet local requirements. We can provide recommendations to help you partner with a reputable Colorado Springs builder.

Step 3: Review Plans, Budget & Timeline
This phase includes your architectural plans, detailed cost breakdown, contractor agreements, and construction timeline. These details help finalize loan terms and determine an appropriate draw schedule.

Step 4: Loan Approval & Closing
Once approved, the loan closes and construction begins. For one-time close loans, this is your only closing.

Step 5: Draw Disbursements During Construction
As the home progresses, funds are released in stages. Inspections verify completion of each phase—foundation, framing, roofing, mechanical systems, interior finishes, and final details—before releasing the next draw.

Step 6: Permanent Mortgage Conversion
With construction-to-permanent loans, the mortgage automatically converts when the home is finished.

Benefits of Choosing 719 Lending – Patty Galceran for Construction Financing

Construction financing requires experience, communication, and strong local insight. With 719 Lending, borrowers benefit from:

✔ Local Colorado Springs Market Expertise
We understand building trends, land options, and the unique requirements of different neighborhoods and developments.

✔ Flexible Loan Programs
We offer several construction financing options designed to support a variety of project types and budgets.

✔ Competitive Rates & Terms
Construction loans through 719 Lending are structured to keep costs manageable throughout the building process and long-term mortgage phase.

✔ Clear Guidance Through Every Step
Our team stays connected with builders, inspectors, and appraisers to ensure a smooth process.

✔ Fast Pre-Approvals & Efficient Processing
Construction timelines are sensitive—our streamlined pre-approval ensures you can begin your project without unnecessary delays.

Common Requirements for Construction Loans in Colorado Springs

Construction loans require more documentation than traditional mortgages. Borrowers typically need:

1. Solid Credit History
   Higher credit scores improve approval chances and may lower rates.
2. Down Payment
   Construction loans often require 10%–20% down depending on the program and project details.
3. Detailed Construction Plans
   Complete plans, cost estimates, builder contracts, and material specifications are required.
4. Financial Reserves
   Lenders want to ensure borrowers can handle unexpected expenses or timeline changes.

How Much Does It Cost to Build a Home in Colorado Springs?

The cost to build varies widely based on location, square footage, materials, and land. Typical expenses include:

• Land cost – Prices vary based on acreage, location, and accessibility to roads and utilities.
  • Site preparation (grading, utilities, excavation) – Colorado Springs terrain can require additional work due to slopes, rocky soil, or elevation considerations.
  • Construction labor and materials – Costs depend on the home’s size, style, and the finishes you choose.
  • Permits and inspections – Required by the city or county to ensure the home meets Colorado building standards and safety regulations.
  • Builder and contractor fees – Includes project management, labor, and specialty trades.
  • Landscaping or exterior projects – Outdoor spaces, fencing, driveways, and drainage systems can add to the budget.
  • Optional upgrades like decks, garages, or basements – Many Colorado Springs homeowners choose enhancements to take advantage of views and outdoor living.

719 Lending helps borrowers determine realistic construction budgets and choose a loan structure that fits their goals.

Tips for a Smooth Construction Loan Experience

  Work With an Experienced Local Builder: Colorado Springs has unique building requirements, so choosing a builder familiar with local codes and climate conditions helps keep your project on track.

  Communicate Clearly: Regular updates with your lender and builder help prevent delays and ensure each stage of the project moves smoothly.