An example of such borrowers includes those who are self-employed or on a commissioned salary, those who obtain revenue from sources they do not wish to divulge or those that receive all or a portion of their income in cash. Such risk is often offset to some degree by borrowers who have significant verifiable assets or who are borrowing only a small percentage of a property's value. This type of loan is typically used to finance the construction of a home. It may or may not also include the purchase of the land upon which the home is to be built. Unlike a typical mortgage loan where the entire amount of the loan is disbursed to the borrower at the time the loan transaction is completed, a construction loan typically involves a series of disbursements which are linked to a construction schedule.
Some construction loans have fixed interest rates, others have variable interest rates.
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