A construction loan is a short-term loan designed to finance the building of a property, whether residential or commercial. Funds are disbursed in stages, known as "draws," according to a predetermined schedule tied to the construction progress.

Alternatively, a construction-to-permanent loan (C2P) streamlines the process by combining construction and permanent financing into a single loan. This eliminates the need for two separate loans one for land and construction and another for the completed property-offering a more efficient and seamless solution.

Key Features of Construction-to-Permanent Loans

Appraisal and Processing:
The proposed home is appraised based on its plans and specifications. The loan application is processed like a standard mortgage.

One-Time Closing:
At closing, the borrower pays any required down payment and closing costs. Funds are disbursed to cover the lot purchase (if applicable) and initial construction expenses.

Construction Period:
During construction (typically 6-12 months), funds are released based on a pre-approved draw schedule. The borrower pays interest-only on the disbursed funds during this time.

.Transition to Permanent Loan:
Once construction is complete, the loan automatically transitions to a permanent mortgage. The borrower begins making regular payments according to the agreed terms, without needing to reapply for a separate mortgage

This streamlined process saves time, reduces paperwork, and provides peace of mind by locking in the loan's terms upfront. Whether you're building your dream home or starting a new investment, a C2P loan offers convenience and financial clarity.