What is construction to permanent home financing?


Construction to permanent home financing is obtained by people who undertake the heavy although gratifying work of building or renovating a house. Banks and lenders offer construction to permanent home financing to help borrowers avoid unnecessary closing costs providing them smooth transition options from a single short term construction loan to permanent mortgage loan.

Features of Construction to Permanent Home Financing

The construction phase is calculated over 6 months to 2 years and upon completion the construction loan translates into a long term fully amortizing mortgage without additional closing costs.

Construction loans are repaid on an interest-only basis. The principal will automatically be included in the permanent home loan established upon completion of the construction phase.

Construction to permanent home financing often varies from as low as $100,000 to as much as several million. It is available both for primary and second homes.

The construction phase of the loan is usually extendable. The permanent phase of the loan can consist of any mortgage type - ARM, FRM and combinations of those with a credit line, if needed.

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