Need a Loan To Build a Home? How Construction Loans Work Need a Loan To Build a Home? How Construction Loans Work If you're building a house, you need a home construction loan, which differs from a traditional mortgage in terms of interest rates, down payments and more. Erica Sweeney, provided by FacebookTwitterEmail In this installment from our Guide to Building Your Own Home, we'll cover everything you need to know about construction loans. Read on to learn how home construction loans work, how they differ from conventional mortgages, what you need to qualify, and what happens once your home build is complete.