A Construction to Permanent Mortgage
How it Works

A Construction to Permanent Mortgage (CP loan) is a three-stage process that allows you to finance the construction of your new home. A CP loan allows you to lock your interest rate and close on your loan before construction is started, unlike other types of new construction mortgages. This is a one-time closing with no need to re-qualify at the time your loan converts to a permanent mortgage upon completion of your new home.

Funds are dispersed during construction to cover the cost of building your new home and interest is only paid on the outstanding balance. Upon the completion of construction, your loan will convert to a permanent mortgage. At this point, a monthly payment schedule will be put into place that includes principal, interest and escrow (if applicable).

  • Stage 1: Application
  • Stage 2: Building & Disbursement
  • Stage 3: Conversion
  • FAQs

During the application stage, you will discuss your loan options with a Construction-Permanent Mortgage Loan Originator (MLO) of your choice or from our list of preferred lenders. You will be guided by your MLO through the process from start to finish. They will gather all appropriate documentation from you and provide you with disclosure information to review and sign.

An appraisal will be performed by a licensed real estate appraiser. After reviewing your home plans, specifications and property, the appraiser will determine what the estimated value of your home will be upon completion of construction.

This stage coincides with the construction of your new home. Loan funds are disbursed based on the terms of your Construction Loan Agreement and draw schedule.

Prior to each disbursement, an inspection is made to validate the work scheduled to be done has actually been completed. Funds are released for payment after each inspection has taken place.

This is the final stage of the process. At this point, your loan is converted from the construction phase to a permanent mortgage.

The Construction to Permanent loan process completes at conversion. You will now begin to make your regular mortgage payments as structured for your permanent mortgage.

What if I don't have land to build on?

Our team of sales professionals is here to assist you. Call or schedule a visit to one of our Design Studios and we will work with you to find land that is perfect for your new home.

Can I finance my land into my mortgage?

Yes. Many people believe they already need to own their own land to obtain a loan to build their home. Construction loans are frequently written to include both the house and the land.

Can I use land equity as a down payment to build a house?

In many cases, yes. If you own land outright or have a significant amount of equity, you can obtain land equity funding, which in turn can be used toward the down payment of your new home.

Budget & Finance Tools

Buying a home is typically one of the largest financial transactions a family will ever engage in. While your Mortgage Loan Originator is always available to walk you through the process and answer your questions, we have provided a number of tools you can use to learn more about achieving your goal of home ownership.

Rent Vs. Buy

Are you better off buying your home, or should you continue to rent? This calculator can help you decide.

Mortgage Tax Savings Calculator

Use this calculator to determine how much you might save in income taxes.

Mortgage Qualifier Calculator

Are you able to buy your dream home? Find out just how much you can afford!

Mortgage Loan Calculator

Use these calculators to help answer many of your financial questions regarding buying a home