Skip links

Construction Loans in Alabama

Receive funds at key stages of your dream build. A construction loan provides financing while you build your home. You receive some funds to get your build started and then again when you complete significant stages like laying the foundations or putting up the roof. Simply send your invoice to us and we’ll pay your contractors directly!

A couple checks progress on their home built with a construction loan.

Benefits of Legacy Construction Loans:

Competitive Fixed Rates

Leverage the equity you have in your lot or land to get a great rate on your construction loan.

Generous Loan Terms

You have plenty of time to complete your build and pay off your loan or convert it to a mortgage.

Up to 80% Financing

Get started with a down payment of just 20% on your total estimated costs to build.

No Maximum Loan Amount

Provide us with your detailed plans and we’ll work with you to make them a reality.

Build Your Home With a Legacy Construction Loan

Once you’ve secured your prime lot or piece of land, the next step is to draw up plans and secure a construction loan.

  • Loan term is 12 months.
  • You receive the funds in a series of draws or installments at key stages of your build.
  • You need to pay at least the accrued interest per month during your loan term.
  • You can convert your remaining loan balance to a mortgage at the end of your term.
  • You need a minimum credit score of 720 and a debt-to-income (DTI) ratio under 43%.
  • The origination fee is 1%.

A Legacy Construction Loan gives you the chance to build a home that’s custom-made for you and your family to enjoy life in Alabama.

A family is excited about their home built with a construction loan.

Legacy Construction Loan Rates

Construction Loan12 months7%*11.779%**

The rate above is during the construction phase only. The final mortgage rate would be determined by the markets at completion. APR is assuming loan amount of $150,000 with a construction period of 12 months.

See Our Simple Application for a Construction Loan in Alabama

Apply Online

Apply Online

Enter your details into our secure online portal and we’ll check if you’re eligible.

Submit Your Plans

Submit Your Plans

We’ll go over your construction plans and estimated costs.

Start Building!

Start Building!

Send us your invoices at key stages and we’ll pay your contractors.



“They actually have people skills. Staff is always happy and extremely helpful. Thank you so very much for all your help.”

Pam H., Birmingham, Alabama

FAQs Construction Loans

A construction loan gives you funding in installments so you can pay your contractors on time and complete your build with ease. Here’s what you need to know:

  • You need to provide detailed plans for your build before we can approve the loan.
  • You get funding at key stages of your build and we pay the contractors directly.
  • The total loan term is 12 months.
  • At the end of your loan term, you can pay off the balance or convert it to a mortgage.

In some cases, you can finance the purchase of your land within the construction loan, but it’s better if you already bought the land or lot using a land loan.

That way, you can leverage the equity in your land to secure a better rate on your construction loan. If you don’t own the land before you get your construction loan, then the loan is unsecured and you will get higher rates and may need to have higher credit scores and cash flow in order to qualify.

Here are the guidelines you likely need to meet to qualify for a construction loan in Alabama:

  • Credit score of 720 or above
  • Debt-to-income (DTI) ratio below 43%
  • Down payment of at least 20% of your estimated costs to build
  • Equity in your land, meaning you own the land outright or have paid off all or some of the balance on your lot or land loan

Because you need a down payment of at least 20%, you do not need to pay PMI on a construction loan. PMI is only usually needed if your mortgage down payment is under 20%.

These are ratios that your lender may use to determine how much you can borrow and what your rate might be.

  • LTV is the loan-to-value ratio, which measures how much you’re borrowing compared to the appraised value of the property you’re buying. If your LTV is 80%, you made a down payment of 20%.
  • DTI is the debt-to-income ratio, or how much total debt you have compared to your total income. Lenders want you to have a DTI under 43%, but some loan programs may allow for higher ratios.
  • PMI is private mortgage insurance, which is a premium you pay to protect your private lender in case you default on your loan. It doesn’t protect you or your home.

You will need to pay closing costs on your construction loan. You can pay upfront, or some or all of the costs may be rolled into your principal or included in your APR.

Legacy is here to make the home-building process easier, and we’ll make sure you fully understand your closing costs before you finalize your loan. Costs may include:

  • Underwriting and processing fees. These are charges for checking all your financial information and documents.
  • Title search and title registration fee. This checks there are no existing liens on your property, so you don’t get landed with debt later.
  • Inspection fees. An inspection checks your land is safe to build on.
  • Appraisal fees. An appraisal checks if the current market value of your home matches the selling price.

Take Your Next Steps With Legacy Credit Union Today:

Get Pre-Approved
Call: 205-930-5000
Contact Us

More Home Loan Options

Adjustable-Rate Mortgage Loans

Get a low, fixed rate and payment for the first period of your loan, then your rate adjusts up or down with the markets.

Learn More

First Time Home Buyer Loans

Make the home buying process easier and stress-free and get help choosing a home loan that matches your budget.

Learn More

Mortgage Refinance

Find out if you qualify for a lower rate or change your term or mortgage types so you get a better payment for your needs and wants.

Learn More

*The interest rate, annual percentage rate (APR), origination fees, discount points and closing costs are subject to change without notice. 

**Your APR will vary based on your final loan amount, credit history, loan to value, margin, and finance charges.

Return to top of page

New Member?
Forgot Password?