A purpose-built loan that disburses in stages tied to construction milestones. Interest accrues only on disbursed amounts during the build period.
Often packaged as construction-to-perm — converts to a regular mortgage at completion to avoid two sets of closing costs. California lenders active in this space include Patelco, Provident, Self-Help Federal Credit Union, and specialty firms.
Part of the BackyardADU California ADU Glossary — plain-English definitions of the regulatory, construction, and financing terms you'll encounter during a California ADU project.