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Glossary: Terms Commonly Used In The Home Building Process

Accessory Dwelling Unit (ADU)

A legal term for a secondary house or apartment that shares the building lot of a larger, primary home. Requirements for ADUs depend on your local municipality, city, or county.


Most commonly the homeowner, but also can be a reference for the home builder company, who acts on behalf of the homeowner during construction.

Construction Loan

A non-conventional ARM loan typically lasting the duration of the construction phase. These loans are generally interest-only payments for no longer than 24 months and balloon after maturity. The criteria for these loans and benefits vary from lender to lender.

Construction Reserve Account

A reserve to pay (in accordance with the Construction Budget) Project Costs not anticipated at the time of any applicable Advance.

Construction-to-Permanent Loan

A loan product that covers the short-term construction phase financing and then is converted to a long-term conventional loan. Not all lenders provide this product and when they do it varies from lender to lender.

General Contractor

A company or an individual contracted by the homeowner who coordinates all aspects of the construction phase and ensures the project is on track until owner approval. This includes but not limited to: deliveries of materials, managing onsite personnel, and safety and...

Horizontal Development

The act of clearing raw land of plants, leveling the land, setting up utility connections, and paving roads and sidewalks.


A term more common in financing that describes the role of the owner as residing in the structure. Some loan products can disqualify applicants based on this status.

Permit Runner

A person whose role involves submitting permits, following-up, and scheduling inspections on behalf of the homeowner in coordination with the local municipality, city, and/or county.

Semi-Custom Home Builder

A General Contractor, very similar to a full Custom Home Builder, but at a fraction of the cost and time to build. An on-your-lot home builder with a set base of plans that can be modified to the homeowner's liking. Typically, homeowners will make light architectural...


A professional or tradesman that is contracted by the General Contractor to perform a specific task within the overall project.


An expert of a trade (painters, electricians, plumbers, masons, etc.)

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