Construction-To-Permanent

Construction to Permanent Loan

A Construction to Permanent Loan (also known as a CTP loan) is a financing option that combines the features of a construction loan with a traditional mortgage, allowing borrowers to cover the costs of building a new home or renovating an existing one and then converting the loan into a permanent mortgage once the construction is complete.

1-4 Family Residential Cooperative & Condo
Primary Residence, O/O, Second Home and Investment Properties
CA, FL, ME, NJ, NY, TX
See Lender's guildine
3-years to 30-years
30-Year Fully Amortization
Up to 80% LTV
NO PPP (Pre Payment Penalty)
Minimum FICO 680
MISC

CPA MORTGAGE LOAN

The CPA letter typically includes the following details:

Verification of Self-Employment
Income Verification
Assurance of Accuracy
CPA Contact Information

When requesting a CPA letter for a mortgage, it’s essential to provide all necessary financial documents to your accountant to support the information included in the letter. Additionally, the content and specific requirements of the letter may vary depending on the lender’s guidelines, so it’s advisable to check with your mortgage lender to ensure that the letter meets their criteria.

Construction to Permanent Loan

Here’s how a Construction to Permanent Loan generally works:

Construction Phase: During the construction phase, the borrower receives funds in stages or draws as the construction progresses. These funds are used to pay the builder or contractor, purchase materials, and cover other construction-related expenses. Interest payments are usually made on the amount drawn during this phase.
Interest Payments: During the construction phase, borrowers may only be required to make interest payments on the amount of money that has been disbursed, rather than the entire loan amount.
Conversion to Permanent Mortgage: Once the construction is finished and the property is ready for occupancy, the loan transitions into a traditional mortgage without the need for a new loan application or closing costs. This simplifies the process for the borrower.
Fixed or Adjustable Rates: Borrowers might have the option to choose between fixed-rate or adjustable-rate mortgages for the permanent phase, depending on the terms offered by the lender.
One-Time Closing: Some Construction to Permanent Loans offer a one-time closing, meaning both the construction loan and the permanent mortgage are closed simultaneously at the beginning, which can save time and money on closing costs.
Qualification and Requirements: Borrowers typically need to meet standard mortgage requirements and provide documentation such as income verification, credit history, and a down payment. Lenders might also require details about the construction plans, builder qualifications, and project costs.
Loan-to-Value (LTV) Ratio: Lenders often evaluate the loan based on the property’s value upon completion to determine the loan-to-value ratio, which may impact the terms and conditions of the loan.

Construction to Permanent Loans can offer convenience by combining construction financing and long-term mortgage financing into a single loan product. However, it’s essential to thoroughly understand the terms, fees, interest rates, and repayment structures before committing to this type of loan. Working closely with lenders and understanding the specifics of your construction project can help ensure a smooth process.