Build Your Dream Home with Single-Close Construction Financing
One loan, one closing, one locked rate. Finance your custom home construction and permanent mortgage together for maximum savings and simplicity.
Why Choose Construction-to-Permanent Loans?
One Closing, Half the Cost
Close once and pay one set of fees ($24K-$36K) vs two closings ($48K-$72K). Save up to $36,000 in duplicate closing costs.
Lock Your Rate Before Building
Lock your permanent mortgage rate TODAY before construction starts. Protected if rates rise during your 6-12 month build.
Interest-Only During Construction
Pay only interest on drawn funds during construction. Payments start low and increase gradually as more funds are released.
Automatic Conversion
Loan converts automatically to permanent mortgage after final inspection. No refinancing, no second approval, no additional paperwork.
Requirements
Financial Requirements
- •Down Payment: 20-25% of total project cost
- •Credit Score: 680 minimum (720+ recommended)
- •DTI Ratio: 43% maximum (36% preferred)
- •Reserves: 6-12 months PITI in liquid savings
Project Requirements
- •Licensed GC: NJ licensed, insured, 5+ years experience
- •Plans: Architectural plans, engineering reports
- •Budget: Itemized construction budget with bids
- •Timeline: 12-month maximum construction period
Ready to Build Your Custom Home?
I specialize in construction-to-permanent financing for custom builds, teardowns, and new construction in Bergen, Morris, Passaic, and Essex Counties. Let's lock your rate and start building your dream home.
Frequently Asked Questions
What is a construction-to-permanent loan?
A construction-to-permanent loan combines construction financing and permanent mortgage into one loan with one closing. You make interest-only payments during the 6-12 month construction period, then the loan automatically converts to a traditional 30-year mortgage when construction is complete.
How much down payment do I need for a construction loan?
Most construction-to-permanent loans require 20-25% down payment of the total project cost (land + construction). Example: $1.2M project requires $240K-$300K down. Some lenders offer 10-15% down for borrowers with excellent credit (740+).
Can I lock my interest rate during construction?
Yes, one of the biggest advantages is locking your permanent mortgage rate at loan approval before construction begins. Your rate is locked for the entire construction period (6-12 months). During construction you pay interest-only at a variable rate, then your locked permanent rate takes effect after completion.
What credit score do I need?
Minimum 680 credit score (720+ recommended for best rates). Construction loans require higher scores than standard mortgages due to increased lender risk. Higher scores (740+) qualify for better rates and lower down payment options.
How long does construction financing take?
Timeline from application to closing: 60-90 days. Breakdown: Loan application (1-2 weeks), underwriting & approval (3-5 weeks), rate lock & closing (1-2 weeks). Construction phase: 6-12 months. Final inspection & conversion: 2-4 weeks. Total: 9-15 months from application to moving in.
What is the difference between single-close and two-close construction loans?
Single-Close: One closing, one set of fees, rate locked before construction, automatic conversion to permanent mortgage. Total costs: $24K-$36K on $1.2M loan. Two-Close: Two closings, double the fees, rate locked after construction, must refinance after completion. Total costs: $48K-$72K. Single-close saves approximately $24K-$36K in closing costs.
Can I build a custom home in Bergen County with this loan?
Yes, construction-to-permanent loans are ideal for custom builds in Bergen County and surrounding areas. Popular markets: Alpine, Saddle River, Franklin Lakes, Ridgewood, Demarest, Cresskill. Typical project costs: $1.2M-$3M+ for custom single-family homes including land acquisition and construction.
What are the cash reserve requirements?
Lenders typically require 6-12 months of permanent mortgage payment (PITI) in liquid savings after closing. Example: $1.2M loan at 6.5% = $7,580/month PITI requires $45K-$90K in reserves. Higher reserves may be required for borrowers with lower credit scores or higher DTI ratios.