Building a home from the ground up is an exciting milestone, but it also requires a very different type of financing than buying an existing property. Homebuyers typically choose between two major loan types depending on their goals: construction loans and traditional mortgages. While both help you finance a home, they work in completely different ways, come with different requirements, and serve different purposes. This guide breaks down everything you need to know — from how each loan works to qualification requirements, costs, timelines, and pros and cons.