Building a new home or purchasing a home under construction is a large commitment. At Chris Doering Mortgage, we are dedicated to helping our customers find the perfect home loan program that will finance their future home.

A construction-to-permanent loan (CP loan) is a mortgage that helps homebuyers fund the land and construction fees that come with building a home. This loan type allows homebuilders to receive the amount of money they need to build a home while it’s being built. Borrowers will draw funds from the loan as needed by the seller or contractor.

Construction-to-Permanent Loan Requirements

Construction-to-permanent loans are short-term loans and convert to permanent loans once the construction is completed. To verify that the construction of the home will be done correctly and result in a home value that is consistent with the loan amount, CP loans require the following:

  • A Qualified Builder. This is a licensed contractor with an established reputation for building quality homes.
  • Home Specifications. You will be asked to provide floor plans and details on the materials that are being used for the construction of the home.
  • Home Appraisal. You must obtain and provide an appraiser’s estimate of the value of the home. They will do so by evaluating the blue book value and specifications of the home. They will also determine the value of the land the home is being built on.
  • A Down Payment. You will be required to provide a down payment at the beginning of the process.

During the application process, your credit score will also be evaluated and you will be asked to provide income information to verify that you are able to make the mortgage payments.

Why Choose a Construction to Permanent Loan

A CP loan has many benefits to home builders, such as:

  • One-Time Closing. You will only need to close once and you will be able to save time and money.
  • Interest-Only Payments. You will only be expected to pay interest on the money you have borrowed instead of paying down any part of the principal loan balance.
  • Deferred Payments. You will not start making full mortgage payments until after the construction of your home is complete.

How to Apply in Florida

If you are planning on building a home, a construction-to-permanent loan may be right for you! While we don’t currently offer Construction to Permanent Loans, we can help walk you through the home buying process and help you understand which loans are best for your circumstance.

We are home buying experts and can help you every step of the way when purchasing a new home.

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