Construction Loans in Vermont
Finance your custom home from the ground up with a loan that supports both the building process and your long-term mortgage goals.
Overview
What Is a Construction Loan?
A construction loan is short-term financing designed to fund the building of a new home. Unlike a traditional mortgage, which provides a lump sum at closing, a construction loan releases funds in stages, called “draws,” as your builder completes key milestones.
With 802 Credit Union, you’ll make interest-only payments during construction, and once your home is complete, the loan seamlessly converts into a permanent mortgage. This one-loan solution simplifies the process, saves you a second closing, and gives you peace of mind from start to finish.
Today’s Rates
All Rates Effective April 1, 2025
Construction and Vacant Land Mortgages - servicing retained
| Term | Rate | Points | APR | Monthly Payment per $1,000 borrowed |
|---|---|---|---|---|
| Construction Loan - 1/1 ARM with General Contractor | 4.50% | 1.00% | 4.777% | N/A |
| Construction Loan - 1/1 ARM Self-Build | 6.00% | 1.00% | 6.246% | N/A |
| Land Loan - 1/1 ARM up to 65% LTV | 6.50% | 1.00% | 6.717% | $7.46 |
| Land Loan - 1/1 ARM up to 80% LTV | 10.00% | 1.00% | 10.25% | $9.65 |
2/6 Cap; tied to 1-year Treasury Bill with 2.875% margin
Land Loan – 20 year maximum term
Construction Loan – 30-year maximum term, includes 12-month interest only construction period
What to Expect When You Build
How Our Construction Loan Works
Our Construction Loan is designed to support every phase of building your home—from breaking ground to moving in. Here’s how the process works:
Pre-Qualification: Start by getting pre-qualified. We’ll assess your budget and help determine your maximum loan amount.
Choose Your Builder: Work with a licensed, reputable builder to ensure your project meets timelines and standards.
Submit Your Plans: Provide your building plans, permits, and cost estimates. We’ll help you gather the necessary documentation for approval.
Loan Approval & Disbursement: Once approved, funds will be released to your builder in phases (called “draws”) as construction milestones are completed.
Construction Phase: Make interest-only payments during construction while we coordinate with your builder to ensure steady progress.
Conversion to Mortgage: After completion, your loan automatically converts to a permanent mortgage—no need for a second closing.
loan Benefits
Financing Designed for Custom Builds
One Loan, Two Phases
Covers both construction and mortgage in one streamlined process.
Interest-Only During Construction
Keep monthly payments manageable while your home is being built.
Local Lending Team
Work directly with Vermont-based experts who know the regional market and construction process.
Timed Disbursements
Builder receives funds in scheduled stages to align with project milestones.
Frequently Asked Questions
Have Questions? Let Us Help!
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More Than a Member
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Testimonials
Hear From Our Members!
Real stories from real people who’ve found their financial home.
I recently moved to Vermont and was looking for a new financial institution. Several people recommended 802 Credit Union. Kim helped me set up my accounts, my direct deposit and got me started with online banking. She showed me how to use Bill Pay, which I never used at my previous bank. What a huge convenience! I highly recommend 802 Credit Union and all the staff at the Windsor branch.
Sarah
Windsor, VT
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