Financing New Construction in Clackamas County

The short answer: New construction financing in Oregon comes in two shapes. If a builder sells you a home on its own lot, you usually get a regular purchase mortgage that closes when the house is finished. If you are building on land you own or are buying, you need a construction-to-permanent loan, closed once or twice. Either way, the long timeline is the real risk to plan around.

What New Construction Financing in Oregon Actually Covers

"New construction" sounds like one loan. It is really three different situations, and each one is financed differently.

The first is a finished spec home. The builder already built it, and it is sitting there with a certificate of occupancy. That house finances much like a resale, with a normal closing timeline.

The second is a to-be-built home in a builder's subdivision. You pick a lot and a plan, sign a contract, and wait. The builder owns the land and pays for the construction. Your loan is a standard purchase mortgage that closes when the home is done.

The third is a custom build. You own the lot, or you are buying it, and you hire a builder to put a house on it. Someone has to fund the construction as it happens. That is where a construction-to-permanent loan comes in, meaning one loan that pays the builder during the build and then becomes your long-term mortgage.

Spec Home, Builder Contract, or Custom Build in Clackamas County

Most new-build buyers I talk to in Clackamas County are in the second group. Think of the hillsides near Scouters Mountain and Rock Creek in Happy Valley, or the Pleasant Valley corridor. Think of Villebois in Wilsonville, or the newer subdivisions on the east side of Canby.

Custom builds show up more on larger lots. Buyers looking toward Boring, Beavercreek, or the rural edges of Oregon City and Molalla are more likely to build on their own land.

Knowing which group you are in is the first thing I sort out. It decides which loan you need, how long your approval has to last, and who holds the risk if the build runs late.

Your question may really be about the cash side: the builder deposit, your down payment, or Oregon Bond or OHCS assistance on a new build. That is covered on a separate page. My new construction down payment guide for Happy Valley is the down payment side. This page is the loan side.

Construction-to-Permanent Financing in Oregon: One Close or Two

A construction-to-permanent loan replaces the short-term money that pays for the build with a long-term mortgage once the house is done. Fannie Mae allows it two ways, according to its Selling Guide section B5-3.1-01. Either way, you must hold title to the lot, or buy it as part of the loan.

One-Time Close Construction-to-Permanent in Oregon

With a single close, you sign once. The lender pays the builder in stages, called draws, as the work progresses. When construction is complete, the loan converts to your permanent mortgage automatically.

The build has a clock on it. Under Fannie Mae section B5-3.1-02, no single construction period may run past 12 months, and the total may not pass 18 months, extensions included. If the build runs longer, the loan has to be handled as a two-close transaction instead.

The appeal is simple. One set of closing costs, one approval, and your permanent terms are set in the documents up front. Before conversion, the rate, loan amount, term, and loan type can still be changed. A higher loan amount is allowed only to cover documented added construction costs.

Two-Time Close Construction Financing in Oregon

With a two-time close, you sign twice. The first loan pays for the build, and often the lot. When the house is done, a second closing pays it off with a new mortgage. Fannie Mae section B5-3.1-03 says the permanent lender can be a different lender from the one that funded the build.

That flexibility has a price. You pay closing costs twice, and you qualify twice. If your income, debts, or the market change during the build, the second approval reflects that.

Two closings can still be the right answer. It fits a long or complicated build, or a builder whose draw schedule a single-close lender will not accept. It also fits a buyer who wants to shop the permanent loan at the end. If you have held title to the lot for at least six months, the permanent loan may even close as a cash-out refinance, subject to program rules.

How a Lender Values New Construction Financing in Oregon

On an existing home, the lender compares your loan to the price or the appraisal, whichever is lower. That comparison is your LTV, or loan-to-value ratio. A new build works the same way, with a twist.

On a single-close loan where you are buying the lot as part of the deal, Fannie Mae divides your loan amount by the lesser of two numbers. One is the lot price plus the cost of construction. The other is the "as completed" appraised value, meaning what the appraiser expects the finished house and land to be worth.

If you already own the lot, the lender uses the as-completed appraised value. That is why land you bought years ago in rural Clackamas County can work in your favor, depending on the program and the property.

The appraisal is checked again at the end. When the house is finished, the appraiser completes a form called a 1004D, which updates the value and certifies completion. If the value has dropped, the lender must get a new appraisal and requalify you at the new LTV. My home appraisal guide for Clackamas County covers how appraisers approach local value.

Your Clackamas County Approval Has to Last the Whole Build

A resale closes in about a month. A new build can take most of a year. Your approval has to survive that gap, and this is where good files go sideways.

On a single-close loan, Fannie Mae generally wants your income, job, and credit documents no more than four months old. That applies at closing and again at conversion. An exception stretches this to 18 months. It applies only when the loan was at or under 95% LTV and got an Approve/Eligible result from Fannie Mae's automated system at closing.

If the exception does not apply, the lender pulls fresh documents before conversion and requalifies you. The same happens on a two-close loan, since the second closing is a new approval.

So the rules for the build are the same ones I give every buyer, held for longer. Keep your job steady. Do not open new credit or finance furniture for the new house. Leave your savings where they are. And tell me before any change, not after.

Builder Preferred Lenders and New Construction Financing in Oregon

Almost every builder in Happy Valley and Wilsonville has a preferred lender. Many offer an incentive if you use that lender, usually a credit toward closing costs or a rate buydown.

That is legal, within limits. Sometimes the builder owns part of the lender it refers you to. Under federal RESPA rules at 12 CFR 1024.15, it must then give you a written Affiliated Business Arrangement Disclosure by the time of the referral. That disclosure explains the relationship and the estimated charges.

The same rules say an incentive for bundling services must be optional, and a discount must be a true discount. It cannot be made up by higher costs somewhere else in the transaction, per the definition of "required use" in 12 CFR 1024.2.

A preferred lender can be a perfectly good choice. The builder's lender often knows the subdivision, the draw schedule, and the completion calendar. My point is only that the incentive is a number you can check. Get a Loan Estimate from the preferred lender and one from an independent option, then compare the rate, the fees, and the credit side by side. My guide to comparing mortgage rate quotes shows how, and my broker vs bank vs online lender page explains who actually lends in each model.

What a Builder Incentive Actually Costs on a New Build in Oregon

A builder credit is what Fannie Mae calls an interested party contribution. The builder, the seller, and the real estate agents are all interested parties, because each gains from the sale.

Fannie Mae section B3-4.1-02 caps how much of that money can go toward your costs. For a home you will live in, the cap depends on your LTV.

• Over 90% LTV: up to 3% of the price or appraised value, whichever is lower.
• 75.01% to 90% LTV: up to 6%.
• 75% LTV or less: up to 9%.

Anything over the cap is treated as a sales concession and gets subtracted from the price. That shrinks the value your loan is measured against. The credit also cannot exceed your actual closing costs, and it can never be used for your down payment or reserves.

Rate buydowns count too. If the builder or its affiliated lender pays to lower your rate, that cost is part of the same cap. My mortgage rate buydowns guide explains how a temporary buydown differs from a permanent one.

Here is the real question I ask with every incentive. Would the builder take a lower price instead? A price cut lowers your loan, your property tax base, and every future payment. A credit only helps at the closing table. Sometimes the credit is the better deal, and sometimes it is not.

Rate Locks and New Construction Financing in Oregon

A rate lock holds your interest rate for a set window. Most locks run 30 to 60 days, which is fine for a resale. A to-be-built home in Happy Valley might not close for six months or more.

That leaves three choices, and each has a tradeoff:

• Float, then lock near completion. Nothing to pay up front, but your rate moves with the market until you lock.
• Take an extended lock. It covers more of the build, but longer locks usually cost more, either as a fee or in pricing.
• Use a builder-paid lock or rate program. Useful when offered, but it counts toward the incentive cap above and usually ties you to the builder's lender.

I do not publish lock prices here, because they change constantly and differ by lender. The honest answer depends on how far along the house is. A home still at the foundation is a very different lock decision from one getting its final walkthrough. My guide to when to lock your mortgage rate covers the basics.

Ask for the builder's completion date in writing, and ask what happens if it slips. A lock that expires a week before closing is the most common and most avoidable new-construction headache I see.

Oregon Protections to Check Before You Sign a Builder Contract

Oregon law gives new-build buyers a few protections. They affect both your loan and your title.

The builder must be licensed. Under ORS 701.021, anyone who builds or bids residential work in Oregon needs a current Construction Contractors Board license with a residential endorsement. You can look up any builder on the CCB website before you sign. A lender will want this too.

You must be offered a warranty. Under ORS 701.320, a contractor who builds or sells a new home it built must offer you a written warranty. It covers defects in materials and workmanship. You can accept or decline it, but you should see it.

You are protected from leftover liens. Subcontractors and suppliers who go unpaid can file a construction lien against the house, sometimes after you close. ORS 87.007 requires the seller of a new home to protect you from those late liens. The seller can do that through title insurance without a lien exception, an escrow holdback, a bond, lien waivers, or by waiting out the lien deadline. The seller must give you a form at closing saying which method it used.

On a construction-to-permanent loan, the lender cares about liens too. Fannie Mae requires all construction work to be paid for and all liens cleared before the loan is sold, per section B5-3.1-01.

FHA and Conventional Loans for New Construction in Oregon

Most new-build buyers in Clackamas County use a conventional home loan. For 2026, the conforming limit for a one-unit home in Clackamas County is $832,750. Some larger new builds in Rock Creek and along SE 172nd Avenue can push past that, which moves the loan into jumbo territory.

FHA works on new construction too. HUD sorts new homes into three stages: proposed, under construction, and existing less than a year old and never lived in. Each stage calls for specific inspections, and the builder signs HUD forms certifying the plans and warranting the construction. The 2026 FHA limit for a one-unit home in Clackamas County is $701,500. My FHA home loans in Clackamas County page covers the program in full.

You may read online that FHA caps new construction at 90% LTV without special approval. That rule was removed by HUD Mortgagee Letter 2020-36. If a lender quotes it to you, ask them to show you the current source.

Buying an older home and fixing it up instead is a different product. My renovation loans in Clackamas County guide covers FHA 203(k) and conventional renovation loans.

How I Work New Construction Financing in Clackamas County, Step by Step

This is the order I use with new-build buyers from Wilsonville to Happy Valley.

1. Name the path. Why it matters: a spec home, a builder contract, and a custom build each need a different loan.
2. Get pre-approved before the contract. Why it matters: the builder deposit is often at risk once you sign, so your approval should come first.
3. Check the builder. Why it matters: a CCB license, a written warranty offer, and a realistic completion date protect both you and the loan.
4. Price the incentive. Why it matters: compare the preferred lender's Loan Estimate to an independent one, and weigh a credit against a price cut.
5. Plan the lock. Why it matters: the lock has to match the completion date, not the contract date.
6. Hold the file steady. Why it matters: your approval may be re-checked before closing or conversion, so no new debt and no job changes.

Step two is the one people skip. My mortgage pre-approval in Clackamas County guide explains what a full pre-approval includes.

Is New Construction Financing in Oregon Right for You?

For most buyers signing with a builder in Happy Valley, Wilsonville, or Canby, the loan itself is ordinary. It is a standard purchase mortgage that simply closes later. The work is in the timeline, the incentive math, and the lock.

A custom build on your own lot is a bigger project. It takes a construction-to-permanent loan, a builder the lender will approve, and more patience. It can be a very good way to get exactly the house you want, subject to credit approval and the property.

One more thing if you might rent the home out someday. Newer buildings sit inside Oregon's rent cap exemption for their first 15 years after the certificate of occupancy. My Oregon rent cap 15-year exemption page explains how that clock works. For each city, see my Happy Valley, Wilsonville, and Canby home loan guides, or every program on the Clackamas County home loans hub.

Frequently Asked Questions About New Construction Financing in Oregon

What is new construction financing in Oregon?

It is the loan behind a newly built home, and it takes two main forms. If a builder sells you a home on its own lot, you usually use a regular purchase mortgage that closes when the house is finished. If you are building on a lot you own or are buying, you need a construction-to-permanent loan. Terms are subject to credit approval and a full loan estimate.

What is the difference between a one-time close and a two-time close construction loan?

A one-time close uses a single closing. The lender pays the builder in draws and the loan converts to your permanent mortgage when the house is done. A two-time close uses one loan for the build and a second closing for the permanent mortgage. You pay closing costs twice and qualify twice, but the permanent lender can be a different lender.

How long can the construction period last on a one-time close loan?

Under Fannie Mae Selling Guide B5-3.1-02, no single construction period may exceed 12 months, and the total construction period, extensions included, may not exceed 18 months. A build that runs longer has to be handled as a two-close transaction for the loan to be eligible for sale to Fannie Mae.

Do I have to use the builder's preferred lender?

No. A builder may offer an incentive for using its lender, but under RESPA rules the offer must be optional. A builder with an ownership interest in the lender must also give you an Affiliated Business Arrangement Disclosure. Compare the preferred lender's Loan Estimate with an independent one before you decide.

How much can a builder contribute toward my closing costs?

For a primary residence on a conventional loan, Fannie Mae caps builder and seller contributions by LTV. The cap is 3% of the price or appraised value over 90% LTV, 6% from 75.01% to 90%, and 9% at 75% or less. Anything over the cap is subtracted from the price, and the credit cannot go toward your down payment.

Do I need an extended rate lock for new construction financing in Oregon?

Often, if the home will not be finished within a normal 30 to 60 day lock window. Extended locks usually cost more, so the decision depends on how far along the build is and how firm the completion date is. A home that is nearly finished may only need a standard lock, subject to the lender's program terms.