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Construction-to-permanent loans are popular options for borrowers who are looking to build a brand-new primary residence, or new second home and don’t want to waste time refinancing when the build period is complete. Also called “single-close” or “1x” loans, a construction-to-permanent loan with land included automatically converts from a short-term construction loan to a long-term home loan, but are they still a good option if you don’t already own the lot you’re hoping to build on?

Does a Construction-to-permanent Loan Include the Land?

The short answer is yes, you can get a single loan for land purchases and house construction! Very often, our borrowers do not already own the property that they intend to build their family homes on. In the case of single-close construction-to-permanent loans, you can choose to bundle the land purchase into the total amount of the construction loan.

Remember that if you are seeking a construction-to-permanent loan, either with land or without, you will have to meet certain requirements set by the lender. Your loan officer can fill you in on the exact figures, but you will usually have to meet an income and FICO/credit score threshold (though the latter might not be the case for some VA and FHA home construction loans for land purchases and house construction).

What if I Want to Renovate an Existing Home?

 While this is not true for all lenders, at The Federal Savings Bank, you have the option to take out a construction loan to pay for renovations. This is true whether it’s a home you already own, or a home you acquire at closing. (Note that VA construction loans for renovations may not be single-close; they must close twice.) Depending on the scope of the renovations, you might ask your loan officer about a no-collateral personal loan to pay for projects estimated under $35,000.

Your financial situation is unique. With unparalleled service to our customers, and the in-house tools to get you approved quickly, we’re proud to help our customers navigate the market. Stay informed by checking out our Learning Center for New Construction. And when you’re ready, allow a construction lending expert from The Federal Savings Bank to help you map out your options for your land and construction loan by calling us at 877-788-2520. We look forward to assisting you.

Subject to credit approval. Terms and conditions may apply. Property insurance is required for all loans secured by property. 

This information is intended for educational purposes only. Products and interest rates subject to change without notice. Loan products are subject to credit approval and include terms and conditions, fees and other costs. Terms and conditions may apply. Property insurance is required on all loans secured by property. VA loan products are subject to VA eligibility requirements. Adjustable Rate Mortgage (ARM) interest rates and monthly payment are subject to adjustment. Upon submission of a full application, a mortgage banker will review and provide you with the terms, conditions, disclosures, and additional details on the interest rates that apply to your individual situation.