Is it true that in a typical construction loan, the interest rate is locked for the entire term of the loan?

In a typical construction loan, the interest rate is often adjustable rather than locked for the entire term of the loan. Construction loans are usually structured as short-term financing options that cover the cost of building a home or property, and the interest rates can fluctuate based on market conditions. They are designed to be interest-only during the construction phase, and once construction is completed, they typically convert into a permanent mortgage, at which point a new interest rate may be established.

Choosing to say that the interest rate is locked for the entire term misrepresents how these loans function in practice. Typically, terms can vary significantly, and borrowers may have the option to lock in a rate at the point of conversion, but this does not occur across the board or for the entire duration of the loan. Therefore, the idea that it is universally true would not reflect the realities of how construction loans are typically structured.