New Construction Loan Program
ONE-TIME CLOSE NEW CONSTRUCTION LOANS
Purchase lot and build your dream house with ready funds
You don’t have to pay for the build and then get a mortgage. The mortgage pays for the build!
Gives general contractors more freedom to build unique dream homes for their clients, rather than cookie-cutter developments.
Once the loan is closed, the cash is ready for labor and materials. It also saves the expense of having to pay for the build up front and then find a buyer.
ONE-TIME CLOSE NEW CONSTRUCTION LOAN means that builder will receive funds to pay the employees and materials from day one (From 95% Loan Amount)
New Construction Loan
Lot loan+Construction cost-down payment=Loan Amount
- Only 5% down. A low down payment makes new construction loans accessible for more borrowers.
⦁ One approval. No need for a second approval.
⦁ Float down option. Once the loan is complete, borrowers can float down to secure a lower interest rate if the market changes or stay locked in no matter how the market moves.
⦁ Initial interest-only payments. During the build period, the borrower can enjoy a lower, interest-only payment.
⦁ Less out-of-pocket expense. The borrower doesn’t have to pay for the build and then get a mortgage. The mortgage pays for the build!
Important Steps to how to get approved for the new construction Loan
Pre - Approval vs Final Approval
You must be fully approved “initially” in order to start your construction project. This is why it is called “one time close” loan. Loan will be fully approved/closed initially. Your house will take few months after this (max 11 months)
Down payment must be ready with initial approval. Either you are going to put 5% down or more.
2 Months of bank statements required to show the balance and satisfy this condition.
Qualify -DTI - Debt Ratio Qualification
Step # 2
This is the important part to start the construction loan process. You must be fully qualified with the income qualification.
Are you going to keep your current home as rental or planning to sell?
If the monthly payment of your current home giving issue to qualify for the constcruction loan, and your current home must be sold before you can move forward.
Step # 3
You must have hired contractor who can complete the construction loan documents for the lender.
Step # 5
Once your loan qualification and contractor documents approved by the underwriter, then you are good to go.
Step # 6
Funds to the contractor will be released as it progress the construction of the home.
Interest Only Payment
Step # 7
During the construction of your home, you ll be only paying “interest only” payment for the 95% of the loan. Lender will approve, fund your loan at the initial approval, but funds will be released to the contractor as it progresses.
One approval. No need for a second approval.
Step # 8
Modify down option. Once the loan is complete, borrowers can modify down to secure a lower interest rate if the market changes or stay locked in no matter how the market moves.
Full monthly payment
Step # 9
You ll start receiving the fully amortized monthly payment including the principal and interest after the final payment and recording with your local county recorder.