A construction loan is a non-revolving, short-term line of credit up to a specified dollar amount that will be used to reimburse the builder for work completed on your home. The builder will send you invoices during stages of construction that you will submit to the bank with your approval to pay. The bank will verify that the work on the home has been completed, and then make a draw on the loan to pay the invoices. After your home is complete, the construction loan will be paid off with permanent financing.