Construction to Permanent Financing

 

What is Construction to Permanent Financing?

Construction to Permanent Financing is also known as "Construction to Perm" or "CP", for short. This is a very specific type of loan program that allows a borrower to purchase land, pay builders & contractors a series of draws during a construction period, and to build a custom home. 

When do I need a Construction to Permanent Loan?

This unique type of loan program is available anytime a borrower wishes to build a custom home. However, just because you wish to purchase new construction, doesn't always mean you will need a construction to perm loan. Many builders offer something called a "Turn Key" home, meaning they are building a home (most of the time in a subdivision) where the construction is financed on their own lines of credit and sold at an agree-upon price. If you wish to purchase land and build on it, then you will more than likely need a construction to perm. 

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What are some insider pointers for Construction to Permanent loans?

​As always, it is a good idea to establish a strong cash position. Construction times often vary and the conversion of your construction loan to the permanent phase usually depends on market conditions that affect the value of the home. Many lenders also carry elevated down payment and cash reserve requirements to compensate for potential market adjustments. So it's always a good idea to have strong cash reserves when building a new home. 

 

Are there any perks for Medical Professionals for Construction to Perm Loans?
Yes. Many of our lender partners carry this program on their menu and many of our Doctor Loan Specialist partners are also licensed by their institutions to originate this type of loan. Some of them reduce down payment requirements on their Construction to Perm Loan programs and eliminate the PMI (mortgage insurance) for all CP loans over 80% LTV for Physicians and other medical professional clientele.