How do construction loans work?

[Timothy Metra]

I had a rather long conversation with my father last night. He used to build houses from the ground up and sell them with his partner who was a general contractor. My dad was the superintendent over these jobs. Really smart guy in terms of these things, he's been doing it his whole life. He even built his own home from the ground up (of course with the help of others).

The project took him almost 8 months. He spent $110k to build it. 2,100 sq ft. 3 bed, 3.5 bath. $56,000 for the land (7.5 acres). He also said that he spent an additional $25,000 than originally planned (that's already included in the $110k mentioned above), because he could afford to hire out coworkers to get the job done faster and decided the money was worth spending. The property was appraised for $205,000.

Obviously, there's a lot of potential, right? I'm considering doing this for a first deal. Both my parents backed my idea. I'm pretty much going to be providing the capital, if this is the route I end up going with.

My question is this:

How do construction loans work?

I'm assuming it's like... $100,000 job. I need 25% down. Interest rate, no idea. Do that and then convert it into a mortgage while waiting for it to sell? I'm very confused about the part after the house is built. I doubt I'm going to live in it. I'd like to sell it quickly and know it's possible. Then do it again with a house I'm living in. In my state, after I'm there for 2 years, I can sell it and not pay a capital gains tax. So that's a plan. Then be an agent on the side while using the BRRR strategy for some rentals.

I always seem to ramble, I apologize. But does anyone know what's best to do in these situations? Should I leave it as a construction loan after it's built, how does that work?