What is a One-Time Close Construction Loan?
If you're looking to build a new home in Massachusetts or Rhode Island that requires financing from the ground up, our One-Time Close Construction Loan may be the right option for you. With this mortgage loan, you can purchase the home's land, pay for construction and development costs, as well as cover the costs of fixtures and appliances with one closing. If you already own the land, its value will be used toward the combined loan to value and the construction loan will be done as a refinance, paying off your land loan. This streamlines the process, allowing you to close on your home loan once, rather than having to secure two or more separate loans for the property, construction, and permanent financing.
During the construction phase the borrower can enjoy a lower, fixed interest-only payment. The loan amount must be within your county's loan limits and follows Fannie Mae and Freddie Mac guidelines, also known as a "Conventional" or "Conforming" loan. The maximum permissible limit for a conforming loan varies by state and county and changes yearly. To find out the limits in your area please click here.
What are the Requirements for a One-Time Close Construction Loan?
In order to qualify for a One-Time Close Construction Loan, you'll need a good credit score, and Onshore Mortgage will work to get your builder and project approved with our Lender upfront. Along with staying below the county loan amount limits mentioned above, the borrower must also meet the following requirements to qualify for a Conventional loan:
Must have a steady income (new salary income can be used immediately with an income letter, hourly wage earners must have their income averaged over 24 months)
Must have a good credit score, 700 or higher.
Must have a low debt-to-income ratio below 50% of your gross income
A One-Time Close Construction Loan may be the ideal option for you if your credit profile and income meet the requirements and you wish to build a new home in Fairhaven, Ma or the surrounding areas throughout Massachusetts and Rhode Island.
What is a One-Time Close New Construction “Purchase” Loan?
A One-Time Close Construction “Purchase” is the loan process used when the borrower is NOT the current owner of the land on which the home is to be built. The borrower will use the funds from closing to purchase both the lot from the Realtor or contractor and fund the construction of their custom home. The loan amount includes the sales price of the lot and the cost to construct the property less the 5% down payment.
What is a One-Time Close New Construction “Refinance” Loan?
A One-Time Close Construction “Refinance” is the loan process used when a borrower already owns the land on which the home is to be built. The borrower will use the funds from closing to pay off any existing liens on the lot as well as finance the cost of construction for their custom home.
What are the Benefits of a One-Time Close Construction Loan?
This construction loan gives general contractors and borrowers more freedom to build unique dream homes, rather than cookie-cutter developments. Once the loan is closed, the loan funds are ready to be used for labor and materials. This construction loan also helps local contractors by saving them the expense of having to pay for the build up front and then find a buyer. Some of the benefits include:
A predictable fixed interest rate and steady monthly payment for the entire term of the mortgage
Borrower can enjoy a lower, interest-only payment during the construction period.
Faster closing times
Reduced closing costs due to only one closing
One appraisal valuation eliminates surprises
Down Payments as low as 5%*
If you're looking to build a new home in Massachusetts or Rhode Island, a Construction Loan may be the right choice for you. Contact Grant Menard today to find out more about our One-Time Close Construction Loan and how we can help you buy your dream home.
*Credit and income restrictions do apply. Please visit our Disclosures page for a detailed breakdown of all loan types.