Type of loan needed to demolish old house to build new one?

Gada: Type of loan needed to demolish old house to build new one?
I currently own and live in an very old house on a small lot. Both house and lot are paid for, with no outstanding mortgages, taxes, nor other leins against them; but the house is very old, very large (takes up most of the lot), very ugly, and not energy efficient. I’d like to demolish it and build a new, smaller, more efficient home on the same lot. What type of loan do I need to do that: Rehab, Contruction, or some other type of loan?

Answers and Views:

Answer by wizjp
Construction loan

Answer by glenn
Construction loan. The easiest thing is to first find a builder that has done this same type of thing before. They could help you thru all the lending and government permits and such.

Very possibly you are not the first one on that street that has done this- so ask one of the other people that has done it.

I know several neighborhoods around here that are 40 or 50 years old where this is going on.