CONSTRUCTION LOANS

Dream.  Design.  Build.  

BUILD THE HOME OF YOUR DREAMS

One-Time Close Construction loans streamline the mortgage process so you can stay focused on designing the details 

CONSTRUCTION TO PERMANENT LOAN FEATURES

  • Conventional with down payments as low as 5%, interest only, during construction

  • FHA with down payments as low as 3.5%, no monthly payments during construction*

  • VA with down payments as low as 0%, no monthly payments during construction*

  • One appraisal, one set of closing costs, one underwriting and approval

  • Locked rates with float down option available

  • Flexible loan terms of 10, 15, 20 or 30 years

  • No re-qualification once closing is complete - no risk of negative impacts due to large purchases in preparation for home ownership

            *Interest accrued during construction may be rolled into the loan upon completion.​

CONVENTIONAL CONSTRUCTION LOAN BASICS

WHAT IS A CONVENTIONAL CONSTRUCTION TO PERMANENT MORTGAGE?

  • A conventional construction loan is a short-term interim loan to pay for building a house.  The lender pays the money out in "draws" to the builder as the work progresses.  A Conventional construction to permanent loan, you borrow the money to pay for the construction and then once the home is completed and you move in, the loan is converted into a permanent mortgage. 

  • This type of loan is basically a two-in-one loan so you only have one set of closing costs to pay, which means less fees. 

  • During construction, you pay interest only on the outstanding balance.  You don't have to pay the principal yet. 

  • Typically you'll have a variable interest rate during the construction phase, so the rate and payment will fluctuate and increase as more of the "draws" are applied to the house. 

  • Once it becomes a permanent mortgage, you'll begin making payments that cover both the interest and principal. 

WHAT CAN IT BE USED FOR?

  • Conventional loans may be utilized for primary or secondary residences, as well as investment properties

  • The maximum loan amount for conforming conventional mortgages can be up to $484,350, but the purchase price of the home may be higher.  For example, $605,437 sales price with 20% down

HOW DO I QUALIFY?

  • To be approved, you need good credit, a lower debt-to-income ratio, and circumstances that demonstrate your ability to pay your mortgage on time

  • The typical minimum credit score needed for a conventional loan is 680 but a credit score of 740 or above will help you achieve an elite interest rate. The higher the credit score, the more likely you are to get the lowest interest rate available

  • Conventional loans either require down payments of at least 5%. 

    • Borrowers who put down 20% or more do not have to pay monthly mortgage insurance

    • Mortgage insurance can be cancelled on a conventional loan when the principal loan balance drops to 78% of the home’s value. This is not the case with FHA loans unless you put 10% down

WHY DO I WANT A CONVENTIONAL CONSTRUCTION TO PERM MORTGAGE?

  • A conventional loan has great benefits for borrowers with good credit and funds for down payment

    • Fast approval, more flexibility, and less restrictions than some of the government-backed options

    • Mortgage insurance on a conventional loan can be cancelled when your principal loan balance falls below 78% of the home’s value, which could significantly lower your monthly payment

  • A construction to permanent mortgage saves you from getting two loans to build a house.  Having both a construction only loan and then a conventional mortgage will require two separate transaction with two sets of fees.  ​

  • A construction to permanent mortgage only requires one qualification, approval, and closing.  If your financial situation would happen to worsen while building you would still be approved and able to move into your house.  

ARE THERE ANY DOWNSIDES TO CONSIDER?

  • Conventional loans can be harder to qualify for if you have a low credit score or high debt-to-income ratio. In that case, interest rates and mortgage insurance can be higher than government-backed loans

TO CONTACT OUR TEAM,

CALL, TEXT, OR EMAIL:

SIMPLICITY MORTGAGE

386.401.9000

INFO@SIMMORTGAGE.COM

COMPANY NMLS # 1755062

411 DUNLAWTON AVENUE

PORT ORANGE, FL 32127

  • Instagram

ALTERNATIVELY, YOU CAN COMPLETE

THE FOLLOWING CONTACT FORM:

  • Facebook