Construction Loan
Short-term financing disbursed in stages as a building project reaches milestones, with the balance due at completion.
Quick flashcard
What does Construction Loan mean on the Texas real estate exam?
Answer: Short-term financing disbursed in stages as a building project reaches milestones, with the balance due at completion.
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Construction Loan definition
A construction loan is short-term financing released in installments, called draws, as the building reaches set stages of completion. Interest is usually charged only on the funds drawn so far.
When construction finishes, the balance is typically paid off by permanent financing, sometimes called a takeout loan.
Source basis
Definition checked against the official sources below on .
On the exam
Exam trap
Tested in
Financing & Settlement (7 of 80 National)
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