If you want to build a new home or renovate an existing one in Flagler County, there are loans designed for each. A construction loan, often set up as a single-close construction-to-permanent loan, funds a build in stages and then converts to a regular mortgage. A renovation loan, such as an FHA 203(k) or a conventional renovation loan, rolls the cost of repairs into the purchase or refinance. The right choice depends on the project, the builder or contractor, and your timeline.
Below are the questions we hear most often from people in Palm Coast, Flagler Beach, Bunnell and the surrounding area, with plain answers to each.
Am I building or renovating?
It sounds obvious, but the line matters to a lender.
- New construction on your own lot usually calls for a construction loan.
- Buying a finished home from a production builder is usually just a standard purchase loan that closes when the home is complete. Our post on Palm Coast new construction mortgage planning covers that path.
- Buying a home that needs work or improving one you own points to a renovation loan or, for smaller jobs, other financing.
- A teardown and rebuild is usually treated as new construction.
Questions about construction loans
How does the money get paid out?
Construction funds are released in draws as the work reaches set milestones, such as foundation, framing, dry-in and final. An inspector typically confirms progress before each draw. During construction, you may pay interest only on the amount drawn so far, depending on the program.
What does the lender need from my builder?
Expect the lender to review the builder’s license, insurance and experience, along with a signed contract, plans, specifications, a detailed budget and a draw schedule. Many lenders do not allow owner-builders, or have strict rules if they do. Requirements vary.
Can my lot count toward the down payment?
If you already own the land, its value or equity may count toward what you need to contribute, depending on the program and how long you have owned it. A lender will review the details.
What happens when the house is finished?
With a single-close construction-to-permanent loan, the loan converts to a standard mortgage after completion, without a second closing. With a two-close approach, you close on the construction loan and then refinance into a permanent loan, which means two sets of paperwork and closing costs. Our article on new construction loans in Florida explains both setups.
Questions about renovation loans
What kinds of projects qualify?
Renovation loans can cover a wide range of work: roofs, kitchens, bathrooms, HVAC, windows, impact glass, additions and accessibility updates. Some programs limit luxury items or structural changes. FHA offers a limited version for smaller projects and a standard version for bigger ones.
How is the loan amount set?
Lenders typically use an “as-completed” appraisal, which estimates what the home will be worth after the work is done. The loan amount is based on that value and the program’s rules, plus the cost of the work and a contingency reserve.
Do I need a contractor in place before closing?
Usually, yes. The lender will want a licensed contractor’s bid, scope of work and timeline before closing. Larger FHA projects may also require a consultant to review the plan and inspect the work.
Florida factors that shape your project
| Factor | Why it matters |
|---|---|
| Permitting | Flagler County and its cities each have their own permit offices and timelines, which affect draw schedules. |
| Flood zones | Homes in high-risk zones may need to meet elevation rules, and major renovations can trigger current flood standards. |
| Wind standards | Florida building code sets wind requirements that influence roof, window and door choices. |
| Builder’s risk and homeowners insurance | Coverage must be in place during construction and at conversion, and hurricane season can delay binding. |
| Property taxes | New construction and major improvements are reassessed, which affects your future escrow. |
Hurricane season deserves its own mention. A storm can pause work, delay inspections and push back your completion date. Ask how your loan handles extensions, and build some flexibility into your rate lock and your own plans.
The upside is real, though. Upgrades like a new roof, impact windows or wind mitigation features can lower insurance premiums. Ask your insurance agent which improvements could help.
Before you apply
- Get a realistic budget from a licensed builder or contractor, with a contingency.
- Check the property’s flood zone and any elevation requirements.
- Gather your income, asset and credit documents.
- Talk with an insurance agent about builder’s risk and final coverage.
- Use our mortgage calculator to estimate the payment once the loan converts.
Frequently asked questions
Can I be my own general contractor?
Most lenders do not allow it, and those that do usually require proof of licensing and experience. It is best to ask before you make plans around it.
How long does a construction loan take to close?
It often takes longer than a regular purchase because the lender reviews the builder, plans and budget. Having those documents ready speeds things up.
Is a renovation loan better than a home equity loan for repairs?
It depends on the size of the project, how much equity you have and whether you are buying or already own the home. A lender can compare the options for your situation.
If you are planning a build or a remodel in Flagler County, Michael Akialis is glad to help you think through the financing from our Flagler Beach office. Read about Michael’s background, browse more Florida mortgage guidance, or call (386) 793-5435.
Mortgage information is for educational purposes only and is not a commitment to lend or extend credit. All loans are subject to credit approval, property approval, underwriting guidelines, program eligibility, and availability. Program rules, rates, fees, and requirements can change. Michael Akialis, NMLS #832250; American Home Mortgage Group LLC, NMLS #1812447.