CONSTRUCTION LOANS

Dream.  Design.  Build.  

BUILD THE HOME OF YOUR DREAMS

One 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 10%

  • Loan amounts from $50,000 to the conforming loan limit, $548,250 for 2021

  • High balance loan amounts available from $548,250 to the high cost county limit

  • Interest only, during construction at the locked rate +0.75%

  • At construction completion a float down will be offered t

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

  • Locked rates with float down option (current Fannie 30 day rate available upon construction completion)

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

  • Re-qualification required on loans over 70% LTV.​

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. 

  • You will have a locked interest rate during the construction phase. 

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

WHAT CAN IT BE USED FOR?

  • Primary properties

  • Planned unit development (PUD)

  • Site Condo

  • Rural Property

  • Properties where construction has already begun (requires approval from title company)

  • Auxiliary homes (a second home on a previously purchased property - appraiser must appraise as a single family home).

  • Ineligible Properties: Manufactured homes, condos (units/structures that have shared walls), log homes and active farm land and lots in excess of 20 acres (some exceptions). 

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 for a construction loan a 720 or higher is required. 

  • Conventional loans either require down payments of at least 10% or 30% if you have a 700-719 credit score 

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

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

  • 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

 870 Dunlawton Ave #309

Port Orange, FL 32127

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