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Combine Your Mortgage and Home Construction Loan

Having your home built is a very exciting time. From initial floor plans, to deciding on the perfect bathroom tile, you’ll have the power to make your home truly your own. Our One-Time Construction Loan makes it easy by giving you the freedom to build your home without taking out two loans.

Once your home is complete, your loan will automatically convert to a conventional mortgage so you only need to close once.

Plus, you’ll only pay interest on the loan until construction is complete which saves you more money.

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Apply for a Construction Loan today!

Getting started is easy! Our online application streamlines the process from start to finish. Submit documents and get updates on the status of your loan, all without leaving the comfort of your own home. Prefer to apply over the phone? Give us a call at 800-353-4449.

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What Is a Construction Loan?

As the name suggests, construction loans provide you with the funds necessary to build or renovate a home. It may cover costs for the land you're building on, materials, permits and labor. The loan could also allow you to get permanent appliances or develop landscaping.

How a construction mortgage loan works depends on which type of loan you need. There are a few variations in the mortgage industry, including:

  • Construction-only loans: These are active only while your home is under construction — usually a year or less. Full payment or getting a mortgage is required at the end of the building phase.
  • Construction-to-permanent loans: This option is a loan that starts as a construction loan, then turns into a regular mortgage once construction is complete. This flexibility can allow people who are building their own homes to avoid paying closing fees twice.
  • Renovation loans: If you're contributing to an already existing home rather than building a new one, a renovation loan is better.
  • Owner-builder construction loans: If you are a licensed builder or contractor, a lender may consider offering you an owner-builder loan. They can be construction-only or construction-to-permanent loans where the borrower is also the home builder.

 

How to Qualify for a Construction Loan

Like all loans, you must meet certain requirements to qualify. For a construction loan at Mortgage Center, you need:

  • A good credit score, usually above 660
  • Any existing debts should be in good standing
  • Enough income to pay off the loan in time and cover a down payment

Although not required, it may be helpful for you to come up with a plan to show your lender and construction company. Make it as detailed as possible, as presenting a good plan to your lender will show you're committed to the project and less likely to be a risk to them. An appraisal of the final product can also help.

 

Benefits of a Construction Loan

When you get approved for a construction loan, you'll appreciate:

  • Fund flexibility: Construction loan terms have much more flexibility than traditional loans. You can use them for various expenses related to the costs of building your home.
  • Interest-only payments: During construction, the only payments you have to think about are interest payments. You won't have to start paying the principal loan until construction is complete.
  • Building freedom: When you're shopping for a home, you'll likely have to make compromises in your wants, whether it's location, size or something else. Using a construction loan gives you the funds to create your home the way you want.

 

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One-Time Close Construction
Effective Date: November 20, 2024
RateAPRPointsPayment
7.125% 7.279% -0.125 $1,347.44

The information provided assumes the purpose of the loan is to purchase an existing single family detached home and will be used as a primary residence. The loan amount is $200,000 and the purchase price is $250,000. For Golden Jumbos, the loan amount is $800,000 and the appraised value is $1,000,000. The property is located in Oakland County, Michigan. There is an escrow account for property taxes and homeowners insurance. The rate lock period is 45 days and the assumed credit score is 780 or higher.

The monthly payment amount shown includes only principal and interest. The escrow for property taxes, homeowners insurance, flood and/or mortgage insurance if applicable are not included in the monthly payment amount. Your actual monthly payment will be higher with escrow account included.

The interest rates, APRs and points shown may change throughout the day due to varying market conditions. Rates effective as of November 20, 2024. Rates are subject to change. To get more accurate and personalized results, please call 800-353-4449 to talk with a loan expert.

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