Construction & Story Loans

Because of the difference between a construction project and buying a home, these loans are not like Fannie Mae or Freddie Mac—but there are also many features that both loans share. Construction Loans typically require interest-only payments during construction and the full loan becomes due upon completion of the project. After completion, the loan can be converted to a regular mortgage (see below), transferred to the new homeowner or a new mortgage may be taken out on the principal by the homeowner. Completion for homeowners means that the house has received its certificate of occupancy. Construction Loans are usually variable-rate loans priced at a spread to the prime rate or some other short-term interest rate. You, the contractor and the lender establish a draw schedule based on stages of construction, and interest is charged on the amount of money disbursed to date.

You should also consider owning the property on which your construction is taking place on in order to have some equity for your construction loan.

Many homeowners use construction-to-permanent financing programs where the construction loan is converted to a mortgage loan after the certificate of occupancy is issued. The advantage is that you only have to have one application and one closing. Contacting one of our mortgage and loan professionals is the first step to getting the funds you need to begin your construction project.

Apply Now to try the Construction & Story loans today!