If you are just buying some random lot in Prior Lake, or working with a mom & pop builder ( I know a couple) then you bet the financing is your responsibility.
But can I please point out AND STRESS that this should not concern you Jim about the transaction. I know a lot of local builders in the twin cities that are damn good at what they do, but just got hammered in the recession. The truth is that for many builders they just can't get the financing like they used to.
What matters the most is you having complete and utter trust in the builder you are working with. The financing will be very easy.
Essentially, this means you must refinance at the end of the term and enter into a brand new loan of your choosing (such as a fixed-rate 30-year mortgage) that is a more conventional financing option for your newly completed house.
Web Reference: http://USAConstructionLoans.com
NMLS # 6395
Financing Kentucky One Home at a Time
If you are building a custom home, or a spec home on a separate lot not part of a development, my experience is that you would be responsible for obtaining the construction loan. I did a few of these when I was a licensed lender and you must work with your builder on a developing the plan into various phases including the timeframes for each one for the lender to fund each aspect of the construction project.
If you are buying a home in a new development, the builder will have established a loan for the project and you will only need to arrange a final loan upon completion.
There are, or at least used to be "one loan" construction to permanent building loans where portions are paid at various milestones and the final loan is set upon completion. Speak directly to a couple local lenders about the current options available and what you may qualify for.
Or email: firstname.lastname@example.org
I have been in the mortgage business over twenty years, and the lenders that tell you that this is an unusual practice are only saying so because they may not be able to help you with it.
A partnership with a source for construction financing is the best way to fulfill this need.
Trace Hawthorne NMLS#876516
Waterstone Mortgage Corp