The size and type of permanent loan should be determined within the context of your entire financial picture. While the permanent loan size is a factor in financing your home, it is less important than the financial structure of the project itself. Between your savings and the loan, you must have enough money to cover the entire cost of the project plus any overages. Unfortunately some building projects run over budget. It is better to plan for more than you think you need since you can always modify to a smaller permanent loan if all of the available loan proceeds have not been spent.
Construction loans are just like any other home loan.
The best loan is the cheapest rate and fee. When you purchase or refinance a home, the process is over when the loan funds. With a construction loan, it is only beginning. The success of your project will depend on how well the 6 - 12 month disbursement procedures meet your finances and your builder's style. A problem in this area could cost you months, thousands of dollars, maybe even your project.