One-Time Close Construction Loans

One-Time Close Construction Loans

  • As Low as 5% Down Payment
  • 700 Minimum Credit Score
  • Construction and Permanent Financing in One Mortgage
  • Interest Only Payments During Construction
  • $766,550 Maximum Loan Amount

One-time close construction loans, also known as construction-to-permanent loans or CTP loans, are a type of mortgage financing that combines the construction loan and the permanent mortgage into a single loan transaction. These loans are designed for borrowers who want to build a new home rather than purchasing an existing property.

Here are some key features of one-time close construction loans:

  1. Simplified Process: With a one-time close construction loan, borrowers only need to go through the loan application and approval process once. The loan is structured to cover both the construction phase and the permanent financing, eliminating the need for a separate loan for each stage.
  2. Construction Phase: During the construction phase, funds are disbursed to the builder or contractor in stages, typically based on predetermined milestones or completion percentages. Borrowers typically make interest-only payments during the construction phase, paying only the interest on the amount disbursed for construction.
  3. Conversion to Permanent Loan: Once the construction is complete, the loan automatically converts to a permanent mortgage without the need for additional paperwork or underwriting. This eliminates the need for a separate closing and associated costs typically associated with transitioning from a construction loan to a permanent mortgage.
  4. Interest Rates and Terms: The interest rates on one-time close construction loans can be either fixed or adjustable. The specific interest rate and terms are determined at the time of loan application and can vary based on factors such as the borrower's creditworthiness, loan-to-value ratio, and market conditions.
  5. Down Payment: One-time close construction loans typically require a down payment, although the exact amount may vary depending on factors such as the borrower's credit profile and the lender's requirements. The down payment is usually based on a percentage of the total cost of the project, including the land acquisition and construction costs.
  6. Builder Approval: To qualify for a one-time close construction loan, the builder or contractor involved in the project usually needs to be approved by the lender. Lenders typically have specific criteria for approving builders, including their experience, reputation, financial stability, and adherence to building codes and regulations.

One-time close construction loans can provide borrowers with a streamlined and convenient financing option for building their dream home. It's important to work with a lender experienced in construction lending and to carefully review the terms and requirements of the loan. Additionally, engaging reputable builders and contractors is crucial to ensure the successful completion of the construction project.