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What is the difference between a lot loan and a construction loan?
At Riverview Meadows, the difference between a lot loan and a construction loan is what each one pays for: a lot loan pays only for the land, a construction loan pays for the build in draws, and a construction-to-permanent loan rolls both into one loan that becomes your mortgage; buying a finished house skips the build. Which one fits comes down to when you want to build, and here that clock starts when your lot closes, after the county records the final plat, which is the official map of the lots.
Last updated: 2026-10-19
The figures on this page are general market ranges from the sources named beside them. They aren't the terms our lending partner offers, and none of them is a rate.
Side by side
| Lot loan | Construction loan (standalone) | Construction-to-permanent | |
|---|---|---|---|
| What it pays for | The land only. | The build, paid out in draws as each stage is finished. | The lot and the build in one loan, which becomes a standard mortgage when the house is done. |
| Down payment | 35% for raw land, 25% for unimproved land, 15% for improved land, per FDIC guidance. | The sources we read give no separate figure. | At least 20% of the total project cost, sometimes up to 30%. |
| Credit | Minimums run from the upper 600s to the lower 700s. | The sources we read give no separate figure. | A credit score of 670 or higher and a debt-to-income ratio of 43% or lower. |
| Payments during the build | You aren't building yet. You pay on the land. | Paid out in draws. | Interest-only, on the money drawn so far. |
| Closings | One for the lot, then a second loan when you build. | One for the build. It "must be paid off or refinanced after construction." | One. |
| Term | Generally 5 to 30 years. An older source puts the top end at about 20 years. | It ends when the build does. | A construction phase of 12 to 18 months, then a standard mortgage. |
| What the lender needs | Not covered in the sources we read. | Plans and a builder before the first draw. | Detailed plans, and a review of the builder's license, insurance, references, finances, contract and budget. The appraisal is on the finished house as planned. |
| If the build runs late | Doesn't apply yet. | You still have to pay it off or refinance when it ends. | An extension fee, and you may have to qualify again. |
| What switching costs | A second loan later, with a second set of costs. | Paying it off or refinancing into a mortgage, with its own closing. | Nothing to switch. It converts on its own. |
Buying a house that's already built
| Regular mortgage on a finished house | |
|---|---|
| What it pays for | A house that is already there. |
| Down payment | As little as 3.5% with FHA, and as little as 5% on a conventional loan. |
| Payments during a build | None. There is no build. |
| Closings | One. |
| What you give up | Choosing the plan. |
Sources, all read 2026-10-19:
- Lot loan down payment, credit, term and rate: Experian, citing FDIC, November 18, 2025 (experian.com/blogs/ask-experian/how-to-get-a-land-loan). The older term figure, and the same direction on rate, from HSH, December 18, 2019 (hsh.com/homebuyer/how-lot-loans-work.html).
- Construction-to-permanent down payment, credit, interest-only payments, one closing, the 12 to 18 months, and the extension fee: Experian, April 17, 2025 (experian.com/blogs/ask-experian/what-is-construction-to-permanent-loan). Also U.S. Bank on interest-only payments, one closing and 12 to 18 months (usbank.com/home-loans/mortgage/construction-loans.html).
- Draws, one-time and two-time close, what the lender reviews, the appraisal, and paying off a standalone construction loan: Lower, updated June 25, 2026 (lower.com/mortgages/construction-to-permanent-loans-explained).
- Finished-house down payments: FHA from our lending partner's financing page; conventional 5% from the Experian article above.
The real limits
- A lot loan now means another loan later. When you're ready to build, you take out a construction loan and pay a second set of costs.
- A construction loan wants the house figured out first. Plans and a builder come before the first draw, and the lender reviews the builder's finances as well as yours.
- Builds run late. On a construction-to-permanent loan, a late build can bring an extension fee and a second round of qualifying.
- A finished house skips all of it. You also don't choose the plan.
Some costs land on the build side no matter which loan you pick. Sewer is $4,258 per home to connect, plus a $20 permit and a $54 inspection, then $30 a month billed quarterly. Water was about $6,678 per home in 2025. Building costs depend on your plan, your lot and your builder, and we don't publish a build price.
Which fits your timing
A construction-to-permanent loan, if:
- You want to start building soon after the lot closes.
- You'd rather sign once than close twice.
- You already have a plan in mind, or a builder you trust.
A lot loan, if:
- The house is a few years off.
- You want to hold the lot while you save up or sell your current home.
- You're fine taking out a second loan when the build starts.
A regular mortgage on a finished house, if:
- You have no interest in building.
- You want to move in without waiting on a build.
- You're happy living in someone else's floor plan.
The steps, in Riverview's order
- Visit and pick a lot. Every lot is $145,000 for the first 10 to close. That price is only guaranteed for the first ten.
- Talk to a lender before you choose a plan, so the loan matches when you want to build.
- Price your plan with a builder. You bring your own plans and builder.
- Reserve the lot. Closing comes after the county records the final plat. The county approved the preliminary plat on June 11, 2026.
- Get permits through Tillamook County.
The lenders
Riverview Meadows works with The Lindley Team at Movement Mortgage, David Chandler and Brianna Lindley. You can also use your own lender. Their full program list is on the financing page, and there is more on building a new home on their site. The Lindley Team: (971) 754-1771.
Talk to the lenders before you pick a plan. If you'd rather see the lots first, book a visit with the brokers at (503) 730-8677.
Movement Mortgage, LLC — NMLS #39179. David Chandler NMLS #265974. Brianna Lindley NMLS #1367416. Equal Housing Lender. This is not a commitment to lend or extend credit. All loans subject to credit approval; rates, programs, and terms are subject to change without notice. The Lindley Team at Movement Mortgage is an independent lending partner referenced with permission; Riverview Meadows is not a lender.
Brokered by The HouseLab Team at Like Kind Realty.
