Construction-to-Permanent Loans, Quickly Explained

June 14, 2024

Construction-to-Permanent Loans, Quickly Explained

Let’s look at how you can use a construction-to-permanent loan to build and finance a custom home.

A construction-to-permanent loan, sometimes called a single-close loan, can provide you with the money to purchase a piece of land, get permits, and pay for the labor and materials to prepare the property and build your home.

Once your home is finished being built, the loan converts to a mortgage.

A construction-to-permanent loan term is typically fifteen to thirty years and has a fixed interest rate, similar to other mortgage loans.

During construction, the lender will ask the builder for verification that the work has been done before paying the builder.

While your home is being built, you are typically only required to make interest payments.

Once construction is complete, you’ll shift to making principal payments in addition to interest payments.

Another loan choice, instead of getting a construction-to-permanent loan, is a construction-only loan that is followed by a mortgage.

Call us at (877) 773-6605 to talk to one of our Mortgage Experts for more information.