Blog Post

A Construction-to-Permanent Loan may be Right for You

We have a lot of clients ask us about lending during the design/build process. We wanted to touch on one of the more prominent loans used at Starr Homes for financing your home building needs, Construction-to-Permanent Loans. A construction-to-permanent loan combines construction financing and mortgage financing into one loan.  The benefits with most lenders include, but are not limited to:

•       Interest only payments during construction
•       Fixed construction interest rate for a set period of time
•       Fixed and adjustable rate loan options at modification
•       No prepayment penalties
•       One loan application and closing
•       A single set of closing costs
•       Mortgage Tax Deduction starts at construction up front
•       Financing land purchase prior to building

The following housing requirements must be met to qualify for a construction-to-permanent loan, with most lenders:

•       Your new home must be a one-unit, single-family detached home
•       It must become your primary residence
•       Your builder of choice must be a licensed contractor (which Starr Homes is)

The idea behind a construction-to-permanent loan is that the lender finances the construction of your home, and when it's ready for occupancy, the loan is converted from a construction loan to a mortgage.  You, Starr Homes, and the lender establish a draw schedule based on stages of construction, and interest is charged on the amount of money disbursed to date. If you already own the land, then that can be considered as equity on the construction loan. A Construction-to-Permanent loan may be right for you and your family's needs and worth taking a look at. Give us a call if you have any questions 913-481-2680.

Starr Homes is the premier award winning Design/Build Kansas City area Green Builder.  For more information please call us at 913-481-2680.