A Construction-To-Permanent Mortgage Loan is a loan that brings you through the entire process of buying and completing construction with a single loan.
This loan helps you avoid having to obtain separate lots and construction financing, lowering the number of moving pieces. Toward the end of the construction period, you’ll be able to work with your lender to change the construction loan into a permanent loan. This type of loan can lower the confusion, paperwork, and headache associated with getting several different loans and financing options. It makes sure everything is in one place. However, you must apply for it just like any other loan and, just like any other loan, this one depends on whether you own the land.
If you do not own the land you’re building on; a construction loan is very beneficial in simplifying the borrowing process to one closing transaction.
If you own the land you’re building, remodeling, or fixing up, a construction loan is still extremely beneficial. It will make sure you have the funds you need to build on, or fix up, the property you currently own, helping you transition into a permanent loan.
The Main Benefit of Construction to Permanent Loans
You do not have to choose a construction loan and then close on a second, permanent loan when your construction is complete. If you want to build your own home on a lot you have or extensively renovate your property to make it your dream house, a construction to permanent loan may be the right financing for you.
What Is a Construction to Permanent Loan?
Construction to permanent financing is a type of loan which allows you to build or renovate your home. When the construction is done, this loan rolls over into a traditional mortgage without you having to go through another closing.
A construction to permanent financing loan may be right for a number of reasons. This financing allows you to borrow up to $2 million. Construction to permanent loan rates are also locked in when you apply, so you may not have to worry about increasing interest rates as you build.
You can use this type of loan for a lot, a build on your lot or renovations. It can cover labor and material costs for your primary or vacation residence.
What Are the Requirements for Construction to Permanent Loans?
Construction to permanent loan lenders may be taking a larger risk with a construction loan than with a traditional mortgage. After all, much can happen during the construction process. Renovations and builds can be delayed, can go over budget and the final result may not be worth as much as projected.
To protect again these issues, construction to permanent loan requirements require you to have:
- A good builder: You will need to speak to an experienced builder who has worked on similar projects and is licensed and insured. Check recommendations and backgrounds carefully to find a licensed general contractor who can do the work.
- Details of the build: Once you have a builder, make sure you have what is known as a “blue book” of the construction project, which will list everything from floor plans to the materials you will be using in your new home or renovation.
- Good credit: You may need a credit score of 680 and ideally of 700-720 or higher to qualify for this type of financing.
- An estimate: You may need to work with an appraiser to determine the expected home value. Whether you need this step will depend on your circumstances and your lender.
- A down payment: You may need a down payment of 20%, but this number may vary widely, depending on your assets, circumstances, proposed project and more. If you are not sure how much you need, you can speak to a loan officer at Assurance Financial to get details about how to qualify for a loan.
Our Construction to Permanent Loan Options
Assurance Financial has several options for your construction to permanent loan needs. We have these single-closing loans and two-closing loans if you prefer the added flexibility. We have loans for homebuyers and for builders. If you meet the requirements for a USDA loan and your project meets specific thermal standards, you may even qualify for USDA construction to permanent loans, which may come with competitive rates.
Assurance Financial understands it can be challenging to find the right financing product for you. If you have a vision for your home, come to us and we may be able to help make that dream a reality with practical suggestions and loan products. Since we underwrite in-house and don’t shop your mortgage around, we may be able to offer flexibility to help meet your needs.
Apply for a Construction to Permanent Loan Today
You don’t want a loan — you want a home. Assurance Financial understands that. It’s why we pride ourselves on being The People People with technology. We treat you like a person, not a number, and we explain your options in plain English. We are not just about numbers, but rather about your homeownership goals.
Our goal is to help more Americans reach the dream of homeownership. It’s why we focus on mortgages and offer a range of loan products to help you get into your dream home or vacation home. Whether you’re building your dream home or renovating or buying an existing home, Assurance Financial has loans for you.
You can apply for a construction-to-permanent loan in 15 minutes with Abby, your virtual assistant. The application is simple, with no need to know complicated terms or enter strings of numbers. Abby lets you sign into your payroll and banks to instantly verify assets and income, which can help you speed up the application and means you don’t have to fax in statements.
If you prefer to speak to a person, we have mortgage experts licensed in 28 states. Our friendly and experienced professionals can listen to your goals and concerns and address them with customized advice. Contact a loan officer today!
In fact, even if you apply with Abby, your application is handled by a real person, so you don’t have to worry about being treated like a number or getting lost in a computer system.
Our process is simple. We pre-qualify you in 15 minutes by pulling your credit and offering you a free, no-obligation quote on a rate. Once you have found your home, builder or are ready to refinance your property, simply fill out the full application. We take care of processing, including in-house underwriting, and let you know if you have approval. Once you sign with a notary to close your loan, you can get started on breaking ground on your new home or moving. Since we handle end-to-end processing without outsourcing, we can take care of your application quickly and answer your questions.
If you decide construction-to-permanent loans are not right for you, we have every loan you could want, from VA mortgages to jumbo loans. To get started, apply online for a home loan or find a loan officer near you to talk about construction loans or other mortgage options.
At this point, you may be weighing your options on the specific benefits of a construction-to-permanent loan.
Let’s go over the basics: Construction-To-Permanent Loan will let you borrow upwards of $2 million, locking in interest rates when you apply, and enabling you to finance a lot or build on a lot for your primary residence or vacation home.
Along with this, you get a 12-month construction period where you make interest-only payments on already distributed funds. As you transition into a permanent loan, you can decide if you want a fixed or adjustable rate loan for financing.
And, above all, this type of loan only has one close, saving you time and money. At the end of the construction period, your home construction loan will be converted into a permanent loan without additional closing costs. At which point, you will begin paying both interest and principal each month.
To start building your dream home, you need first to make sure you have all the funds required. We take the stress out of the entire process with our construction-to-permanent loans, making everything easier, faster, and all in one place.
If you need help converting your construction loan into a permanent one or are interested in financing a new build, contact our Loan Officers and let us help you find the perfect option for you!