If you're thinking about building your home from the ground up, one of the trickiest parts can be figuring out how to finance a brand-new build. Financing a home that doesn’t exist yet comes with its own set of challenges, but here’s some good news: There’s a special kind of loan designed to make building your dream home easier and less stressful. It’s called a construction-to-permanent loan, and it might be exactly what you need.
At our in-house mortgage company, K. Hovnanian® American Mortgage, L.L.C.™ (KHAM), we want to make your homebuying experience as smooth and worry-free as possible. So let’s walk through what a construction-to-permanent loan is, how it works, and why it could be a smart choice for your new home journey.
What Is a Construction-to-Permanent Loan?
Simply put, a construction-to-permanent loan combines two loans into one: a construction loan to cover building your home, and a permanent mortgage that kicks in once construction is complete. Instead of juggling two separate loans and closing twice, you get a single loan with one closing. This means less paperwork, fewer fees, and a more straightforward path to owning your new home.
Why Choose a Construction-to-Permanent Loan?
KHAM’s construction-to-permanent loan offers some big benefits that make building your home easier and more affordable:
1. Rate Lock Protection
With this loan, you lock in your interest rate just once, right at the start. That rate stays the same for as long as you own your home. So if interest rates rise while your home is being built, you’re protected. No surprises, no worries.
2. Financing Is Complete Before Construction Begins
One of the most nerve-wracking parts of building a home is worrying about financing. With a construction-to-permanent loan, you get your financing squared away before the first nail is hammered. That means you can focus on the fun parts of building your home — like picking out paint colors and planning your layout — without financial uncertainty hanging over your head.
3. Transfer Tax Savings*
Building your own home may come with an added perk. You may only pay transfer tax on the land when you close on your lot. By comparison, when you buy a finished home, transfer tax may apply to the full purchase price—including both the land and the home. This could mean potential transfer-tax savings. Potential transfer-tax savings may be available in Maryland, Virginia, Georgia, Texas, Ohio, and Arizona.
How Does the Construction-to-Permanent Loan Process Work?
Home financing can feel like a maze, but with KHAM, the process is designed to be quick and simple. Here’s how it breaks down in seven easy steps:
1. Sign Your Purchase Agreement
This is your first official step toward your new home.
2. Register Within 24 Hours
Complete your customer registration with KHAM quickly to keep things moving.
3. Speak with Your Account Manager Within 48 Hours
Your account manager will guide you through your loan application and answer any questions.
4. Provide Documentation Within 48 Hours
Submit the paperwork needed to complete your loan application.
5. Loan Approval Within 30 Days
You’ll find out if your loan is approved within about a month.
6. Close & Begin Construction (45-60 Days)
Close on your loan, get the title to your homesite, and construction begins!
7. Move In!
Once your home is built, you get the keys and start enjoying your new space.
What Makes KHAM's Construction-to-Permanent Loan Different?
KHAM is committed to making your homebuilding journey as smooth as possible. Our construction-to-permanent loan is designed to protect you from rising rates and to get your financing done upfront, so you can focus on the exciting parts of building your home.
We want you to feel confident and secure throughout the process — from signing your purchase agreement to moving into your dream home.
Ready to Build Your Dream Home?
If you’re thinking about building a new home, a construction-to-permanent loan could be the key to making it happen without the usual complications. It’s a smart, low-hassle alternative to traditional mortgage loans that helps you lock in your rate early, save on transfer taxes, and get your financing done before construction even starts.
At KHAM, we’re here to help you every step of the way. To learn more about construction-to-permanent loans and how they can work for you, visit khovmortgage.com, or talk to one of our friendly account managers today.
Frequently Asked Questions (FAQ)
Q: How long does it take to get approved for a construction-to-permanent loan?
A: Typically, you’ll find out if your loan is approved within about 30 days after submitting your documentation.
Q: Do I have to close twice with this loan?
A: No. One of the biggest perks of a construction-to-permanent loan is that you only close once — at the start. This saves you time, money, and hassle.
Q: What happens if interest rates go up during construction?
A: Your rate is locked in from the beginning, so you’re protected from any increases during the building process.
Q: Will I pay transfer tax on the home while it’s being built?
A: In most states (except Delaware), you only pay transfer tax on the land when you close on your lot, not on the home’s value as it’s constructed.
Q: Can I use this loan for any type of home construction?
A: Construction-to-permanent loans are designed for new home builds, whether it’s a custom home or a home in a community like those built by K. Hovnanian Homes.
*See khov.com for full details. Potential transfer-tax savings associated with construction-to-permanent financing vary by state and transaction structure and may not be available in all jurisdictions. Any reference to potential savings is for general informational purposes only and does not constitute tax or legal advice. Savings are not guaranteed. Consult a qualified tax advisor, legal advisor, or closing professional to determine the applicable tax treatment for your transaction. All Rights Reserved. Offer subject to all RESPA guidelines. This is not a commitment to lend. Not all borrowers will qualify. Certain restrictions apply. See khov.com for full details. Delaware requires transfer tax on finished home value. K. Hovnanian American Mortgage, L.L.C. NMLS #3259|3601 Quantum Boulevard, Boynton Beach, FL 33426 (www.nmlsconsumeraccess.org) | KHOVMORTGAGE.COM. Licensed by Arizona Department of Insurance and Financial Institutions. Lic. #906585. ©2026 K. Hovnanian Arizona New GC, LLC; ROC 188563. ©2026 K. Hovnanian Arizona New GC, LLC; ROC 277023. Licensed by California Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act. Lic. #4130532. ©2026 K. Hovnanian California Operations, Inc. DRE license #01183847. Licensed by Delaware Office of the State Bank Commissioner to engage in business in this State. Lic. #7864 Expiration 12/31/2026. Licensed by Florida Office of Financial Regulation. Licensed by the Georgia Department of Banking and Finance #22272. Licensed by the Maryland Office of the Commissioner of Financial Regulation. Licensed by New Jersey Department of Banking and Insurance. Licensed by Ohio Division of Financial Institutions. Lic. RM.850228.000. Licensed by the Pennsylvania Department of Banking and Securities. Licensed by South Carolina Board of Financial Institutions. Mortgage Banker Registration issued by Texas Department of Savings and Mortgage Lending. Licensed by Virginia State Corporation Commission, Bureau of Financial Institutions Lic.#MC — 2661. Licensed by the District of Columbia Department of Insurance, Securities and Banking. Licensed by the West Virginia Division of Financial Institutions. See a sales consultant for full details. Equal Housing Opportunity.