Construction-to-permanent loan requirements are imposed by a lending institution when you apply for a mortgage to build a brand-new home. While it might also be called a “single-close” new construction loan, a construction-to-permanent mortgage is unlike other construction loans because it automatically converts to a (usually 30-year) long-term mortgage after the build is completed. If you don’t want to refinance your home while planning your move-in, a construction-to-permanent loan might be an excellent option.
What Do I Need for Construction to Permanent Loans?
There are a few things you’ll need for a construction-to-permanent loan. First, you’ll want to be sure you have a good credit score/FICO score, as well as sufficient income to meet your monthly payments. This is true whether or not you’re specifically seeking a construction-to-permanent loan, though the requirements for any construction loan are usually higher than they are for conventional mortgages.
Most lenders’ construction-to-permanent loan requirements will also have you submit the building plans and an itemized budget for your new home. Your builder will need to provide a copy of their license, proof of insurance, and sometimes their annual financials as well. If your loan is approved, your lender will disburse funds directly to your builder over the course of the construction period.
Why Should I Get a Construction-to-Permanent Loan?
Building a home can be a tremendous undertaking. The extra requirements for a construction loan are just one example of the many demands you can expect to come your way if you choose to build instead of buying a home. But many borrowers decide they are tired of renting, or their family has needs that can’t be satisfied by the existing housing market in their area.
When you call The Federal Savings Bank at 877-788-2520, an expert loan officer can assist you in writing and executing a plan of action for your homeownership goals, no matter your financial situation. You may also choose to explore our Learning Center, a free resource for prospective homeowners designed to help them make one of the most important financial choices of their lives with all the information they need.