Sometimes an existing home just won’t do. You might have found some of the features you were looking for, but you haven’t found the perfect home on the market. If you’re going to undertake one of life’s most expensive purchases, you deserve to have exactly what you want.

WHAT IS A CONSTRUCTION-TO-PERMANENT LOAN?

A construction-to-permanent (also called a one-time close) home loan is a single loan that allows to you finance the costs of building a new home — including the land needed for construction.

WHAT ARE THE BENEFITS?

A construction-to-permanent loan offers the following benefits:

  • The loan is underwritten and closed before construction begins.
  • Payments due during construction phase are interest only.
  • Your interest rate is protected (“locked”) during construction.
  • When construction is complete, the loan converts into a mortgage.

CONSTRUCTION-TO-PERMANAENT LOAN TYPES & ELIGIBILITY REQUIREMENTS

Three product types are available depending on your situation and goals, all with builder-paid construction costs:

CONVENTIONAL

  • Available as a fixed rate mortgage with a 10 to 30-year term
  • Minimum 700 FICO credit score required
  • Max loan-to-value (LTV) ratio of 70%
  • Can be used for single family, modular and manufactured homes

FHA

  • Available as a fixed rate mortgage with a 10 to 30-year term
  • Max LTV of 96.5% if FICO is 580 or higher, otherwise 90% LTV
  • Can be used for modular, manufactured and traditional construction homes
  • Subject to FHA guidelines (engineer certification required)

VA

  • Available as a fixed rate mortgage with a 10 to 30-year term
  • Minimum 530 FICO credit score is required
  • Max LTV of 100% plus VA funding fee
  • For 1-unit residential homes, condos, manufactured homes and modular homes
  • Subject to VA guidelines

THE HOME FINANCING PROCESS

The process for obtaining construction-to-permanent financing differs from traditional home financing because these loans are complex and have many moving pieces. In general, the following roadmap should help you understand your role in the financing process.

  • Select your builder.
    Choose a builder and work with them to create the plans and specifications for the home. If the home is modular or manufactured, the builder will provide a base model price with any additions or customizations included. If the home is site-built, the builder will provide an estimate based on the plans and specifications. A deposit may be required either way.
  • Provide information on the project.
    Details on the home, land, construction costs, and project duration will be gathered. For CrossCountry Mortgage, Inc., doing business in the State of New York as CrossCountry Financing, construction-to-permanent loans, the builder will be responsible for paying construction period related costs.
  • Submit a loan application.
    You’ll work with us to complete and submit a loan application. Your builder will also receive some additional information to complete. The loan will be underwritten and closed, and then construction phase will be administered. Once construction is complete, your loan will convert to a permanent mortgage. If you’re dreaming of building your own custom house, contact us today. We’ll help you identify the right construction loan for your needs and walk you through the process from start to finish.


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