Building a custom home is one of the most rewarding investments you can make — and Central Oregon, with its breathtaking scenery and thriving communities, is an ideal place to bring your vision to life. Whether you’re drawn to Bend’s vibrant lifestyle or the quiet charm of Sisters, understanding how to finance your custom home is the key to making your dream a reality.
At Cornerstone Residential, we’ve helped countless clients design and build homes tailored to their lifestyles and budgets. In this guide, we’ll walk you through the essential steps of financing a custom home in Central Oregon, from understanding loan options to preparing financially for the build.
1. Know Your Budget and Financial Readiness
Before diving into floor plans and finishes, establish a clear budget. Custom homes involve two major costs: land acquisition and construction. According to Redfin, the median home price in Oregon as of mid-2025 hovers around $560,000, but custom builds often exceed this depending on size, design, and materials.
Here’s what you should evaluate:
- Your credit score: A score above 700 improves your chances for favorable loan terms.
- Debt-to-income ratio: Lenders typically prefer it under 43%.
- Cash reserves: Be prepared to put down 20–25% of the total project cost.
If you need help estimating costs, consult professionals like Cornerstone Residential early in the process. We provide transparent project estimates that align with your goals.
2. Understand Construction Loans vs. Traditional Mortgages
Financing a custom build is different from buying a pre-built home. Most buyers use a construction-to-permanent loan, which rolls construction financing into a standard mortgage once the home is complete.
Key types of loans:
- Construction-to-Permanent Loan: Covers the cost of construction and automatically converts to a mortgage after completion.
- Construction-Only Loan: Finances construction alone, requiring you to secure a mortgage separately later.
- Owner-Builder Loan: For those who plan to act as their own contractor — though harder to qualify for.
Resources like Consumer Financial Protection Bureau provide detailed breakdowns of loan options and terms. Working with a lender experienced in construction loans, such as OnPoint Community Credit Union or First Interstate Bank, can make the process smoother.
3. Secure Pre-Approval Early
Just as with a traditional mortgage, pre-approval strengthens your position and clarifies your budget. A lender will evaluate your financial profile and issue a pre-approval letter indicating how much you’re eligible to borrow.
Pre-approval helps you:
- Set realistic expectations for your home’s size and features.
- Make informed decisions about land purchases.
- Demonstrate to builders (like Cornerstone Residential) that you’re ready to proceed.
4. Factor In Land and Site Costs
If you haven’t purchased land yet, remember to include that in your financing plan. Costs can vary dramatically depending on location, zoning, and site prep requirements. According to LandWatch, land prices in Central Oregon range widely — from $150,000 for smaller lots to over $500,000 for premium parcels near Bend.
Additional expenses such as grading, utility connections, and permits should also be included in your budget. Discuss these early with your builder to avoid surprises.
5. Work With a Trusted Builder and Design Team
Your builder plays a crucial role not just in construction but also in financing efficiency. Lenders are more comfortable approving loans when working with reputable builders known for on-time, on-budget projects.
Cornerstone Residential offers full-service custom home design and construction throughout Central Oregon, with over 24 years of local expertise. From concept to completion, we collaborate with clients to optimize their design vision while keeping financial goals in mind.
6. Plan for Contingencies and Unexpected Costs
Even with careful planning, construction projects can encounter unexpected expenses. A good rule of thumb is to budget an additional 10–15% of total costs as a contingency fund. This ensures you’re prepared for supply chain delays, design changes, or site challenges without derailing the project.
7. Leverage Local Incentives and Energy-Efficiency Programs
Oregon offers various programs and rebates for energy-efficient building, which can reduce your overall costs. Check out the Energy Trust of Oregon for incentives related to solar panels, insulation, and efficient heating systems.
Incorporating these features not only reduces long-term utility bills but can also increase your home’s resale value.
8. Stay Involved and Communicate Regularly
Once construction begins, regular communication with your builder and lender is essential. Most construction loans disburse funds in stages (called “draws”) as milestones are completed. Staying informed about progress and payments helps avoid delays and ensures transparency throughout the project.
Final Thoughts: Turn Your Vision Into Reality
Financing a custom home may seem complex, but with the right preparation, team, and lender, the process is straightforward and rewarding. By understanding loan options, planning for contingencies, and working with a trusted local builder, you can turn your Central Oregon dream home into a reality.
At Cornerstone Residential, we’re passionate about building homes that reflect your vision and lifestyle. Whether you’re just starting to explore financing or ready to break ground, our team is here to guide you every step of the way.
Contact us today to start planning your custom home project in Central Oregon.