What Is a Construction Loan?
A construction loan is a short-term loan used to finance the building of a home or another real estate project. The builder or home buyer takes out a construction loan to cover the costs of the project before obtaining long-term funding. Because they are considered relatively risky, construction loans usually have higher interest rates than traditional mortgage loans.
Generally speaking, heavy equipment financing will have interest rates as low as 8% or as high as 30%. A word of warning: You may see rates advertised as low as 5% to 6%, but it’s a rare occurrence that you’d actually be able to secure a loan at those rates.