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A construction home loan is a type of mortgage loan that is used to finance the construction of a new home or large renovation project. The loan is typically used to pay for the cost of the land, the cost of the construction, and the cost of any associated fees and permits.
Generally, the loan is disbursed in stages, with funds being released as the construction progresses. Once the home is completed (or the construction period has elapsed - usually 12 months), the home construction loan reverts to a traditional mortgage loan.