North Alabama Custom Home Builder

How construction financing affects the price you see, your budget during the build, and who has money riding on the schedule

You’ve been told your custom home should take about six months to build. Fair enough. But before you plan your move around that date, there’s one question worth asking: what happens financially if six months turns into nine?

Most buyers naturally think about the delay itself. What they may not realize is that the home is still being financed every month it’s under construction, which means someone is still carrying the interest while the clock is running.

That’s where the construction loan comes in. It’s the short-term financing used while your home is being built, and builders handle that cost in different ways.

So if you’re planning a custom home here in Huntsville or elsewhere in the Tennessee Valley, I’d want answers to three questions before signing anything.

What To Ask About The Construction Loan  

1. Is the cost of the construction loan already included in this price?

2. Will I need to pay interest during the build?

3. If the build takes longer than planned, who carries the additional cost?

Those answers tell you what the quote actually covers, what you may need to fund before closing, and what happens financially if the schedule moves.

Let’s take them one at a time.

Question 1: Is The Cost Of The Construction Loan Already Included?

Some builders give you a price based on the specifications for the house, then add the cost of carrying the construction loan separately.

On a six-month build, I’d say that may run around $25,000 to $30,000. On a nine- to twelve-month build, it could be $30,000 to $40,000, depending on the builder.

At Newton Homes, we carry the construction loan ourselves on the homes we build here in the Tennessee Valley.

You put down your deposit, we pull the loan, and the cost of carrying it is built into the price. You also get a specification list showing what’s included in the house, so you have a firm price and a clear picture of what that number covers.

That’s the first thing I’d establish with any quote. Before you sign, find out whether the construction financing is already inside the price or whether it comes later.

Question 2: Will I Need To Pay Interest During The Build?

Once you know where the loan cost sits, the next question is when you actually have to pay it.

Some builders have the customer pay the interest each month while the house is under construction. With us, after your deposit, we’re not coming back each month asking you to cover the interest.

That can make a practical difference while you’re building because your other living expenses haven’t stopped. You may still be making payments on your current home, along with everything else you normally have to cover each month.

To be clear, you are still paying for the construction financing. We’ve simply built that cost into the price of the home instead of asking you to fund it month by month during the build.

That means you can keep more of your cash available while the house is going up.

Question 3: If The Build Takes Longer, Who Carries The Additional Cost?

This is the part I think is worth paying particular attention to.

We build around six months of interest into our price.

Once we start, we want to get the house finished within the contract timeframe because the longer it hangs out, the more interest we carry and the less we make.

So if the job runs longer because of us, that additional carrying cost comes out of our side.

That gives us a financial reason to stay on top of the schedule and get the home finished when we said we would.

Of course, there are things nobody can control. Weather can delay a build. And if changes from the buyer are holding things up, or the house is finished and closing is being delayed on their side, then we’d need to have a conversation about who carries that extra interest.

The important thing is knowing how that works before the build starts.

Before You Sign, Put The Timeline Beside The Price 

A six-month build becoming a nine-month build doesn’t only change your move date. There’s still money being borrowed while those extra months pass.

What matters is knowing, before you sign, where that cost sits and who carries it if the clock keeps running.

If you’re relocating to Huntsville or elsewhere in the Tennessee Valley, financing is only one part of getting the timing right. Your pricing, selections, contract and construction start all have to happen early enough to work backward from the date you need to be here.

Frequently Asked Questions

Planning a custom home in the Tennessee Valley? Contact Newton Homes or call (256) 867-0433 to talk through your timeline.