Construction Loans

Building a home?

Building your dream home is an exciting but intimidating endeavor. It is important to understand your financing options. With a construction loan from The Southern Bank, you can access the capital you need to break ground on your new project. We’re a local, trusted financing partner with over 85 years of experience serving customers just like you.

Basics of a Construction Loan

What is a construction loan?

A home construction loan is a short-term, higher-interest loan that provides the funds required to build a residential property.

How do the rates compare to traditional mortgages?

The rates for construction loans are generally higher than mortgage loan rates. Whereas a traditional mortgage uses your new home as collateral against the loan, a construction loan cannot because there is no property yet. Because of that, the bank is taking a larger risk as the lender.

How to qualify?

Before qualifying for a construction loan, you’ll need to make sure you have all your plans put together for the new build. That would include a detailed construction plan (i.e. from an architect or builder) as well as a timeline and budget.

Once you get approved, the lender will put you on a funding schedule that follows the timeline of your build. For example, you may need $50,000 for excavation work up front, the $100,000 a month later for frame construction and finishing materials. This is unlike a personal loan, where the lender gives you all the money up front (lump sum). Instead, it drips into your account on a schedule as you need it for construction.

What’s next after the home is built?

After the home is built, you may also be able to convert the original construction loan into a traditional mortgage – known as construction-to-permanent lending. For more information about this, or any other questions about construction loans, talk to one of our representatives today.

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Find a Southern Bank branch near you

Gadsden, AL

Address:
221 South 6th St
Gadsden, AL 35901

Phone Number:
(256) 543-3860

Business Hours:
Monday thru Thursday, 8:30 AM to 4:00 PM
Friday, 8:30 AM to 5:00 PM

Albertville, AL

Drive-Thru Only; Lobby Available by Appointment; Closed Daily 1-2 PM for Lunch

Address:
625 East Main St
Albertville, AL 35950

Phone Number:
(256) 878-0314

Business Hours:
Monday thru Thursday, 9:00 AM to 4:00 PM
Friday, 9:00 AM to 5:00 PM

Centre, AL

Address:
390 West Main St
Centre, AL 35960

Phone Number:
(256) 927-5588

Business Hours:
Monday thru Thursday, 9:00 AM to 4:00 PM
Friday, 9:00 AM to 5:00 PM

Guntersville, AL

Closed Daily 1-2 PM for Lunch

Address:
2204 Henry St
Guntersville, AL 35976

Phone Number:
(256) 582-3197

Business Hours:
Monday thru Thursday, 9:00 AM to 4:00 PM
Friday, 9:00 AM to 5:00 PM

Birmingham, AL

Commercial Finance Division

Address:
2151 Highland Ave
Suite 330
Birmingham, AL 35205

Phone Number:
205-868-1515

Business Hours:
Monday thru Thursday, 8:30 AM to 4:00 PM
Friday, 8:30 AM to 5:00 PM

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