The Best Answers to Your Construction to Permanent Loan Questions
Building your home can be stressful. Whether you already own your land or you want to buy land and build, AgSouth Mortgages can finance your land and construction and save you money with a one-time closing with our Construction to Permanent (C2P) Program. Below are answers to frequently asked questions regarding our C2P Program.
Construction to Permanent (C2P) FAQ’s
What are my Construction to Permanent Loan Options?
- Financing up to $726,200
- Up to 95% loan-to-value over a 12 month construction period.
- Lock-in fixed rate during construction with the ability to lower rate upon completion if market changes (fees may apply)
- Financing up to $2,999,999
- Up to 80% loan-to-value over a 12 month construction period
- Lock-in rate during construction. Available with fixed rate or adjustable rate.
What is the C2P timeline?
The C2P timeline is longer than a normal home mortgage loan. This is because we have to verify and approve not only your information but your builder’s contract as well as review the construction plans and specifications. The time it takes to build your home will also vary based on a variety of factors including size of the home, builder availability, and market factors that might affect supply and demand.
Can I build my own house?
In our conventional C2P program, self builds/owner general contractors are not allowed. In our Jumbo C2P program, you can build your own house as long as you are a licensed contractor. The contract must be with your company, and all draws will be issued directly to the company rather than you as an individual.
Does my builder have to be approved beforehand?
Conventional C2P does not require a builder to be “approved” but we do have a contract approval process, and we require them to be licensed in the state in which they are building. We will request documentation from the builder and review their builder’s license and confirm that they are in good standing in their state.
For our Jumbo C2P program, if not already on the approved contractor list, the builder will have to be approved. We will ask for a list of credit references and subs from the builder and review their builder’s license and confirm that they are in good standing in their state. This is a quick and easy process!
Can you finance construction of a barndominum or a log home?
Barndominiums and log homes are some of our most popular builds in both the conventional and jumbo C2P products. We finance the barndominium homes under the same guidelines of a traditional stick built home.
What can I include in my construction loan?
Almost anything the builder says they will build. Examples include pool, shops, wells, septic tanks, barns, etc.
What is the maximum amount I can borrow?
You can borrow up to $726,200 in our conventional C2P program with up to 95% loan-to-value over a 12 month construction period. If you are planning to build a home that exceeds the program limit, we have a Jumbo C2P product that allows you to borrow up to $2,999,999 with up to 80% loan-to-value over a 12 month construction period.
What are my permanent mortgage term options?
For our conventional C2P, we offer 15 or 30 year terms. If interest rates drop during construction, you can lower your rate at modification (fees may apply).
For our Jumbo C2P, we offer 15 or 30 year fixed rate as well as a 10/3 adjustable rate and a rate rock during your construction.
What if I’m self-employed?
Additional financials will be needed for self-employed borrowers. This includes: Copies of last two years’ personal tax returns (with all schedules signed and dated), copies of last two years corporate or partnership tax returns (with all schedules signed and dated, including K1’s), year to date current profit and loss statement (signed and dated).
What may I be responsible for out of pocket?
- Down payment (if you don’t own the land)
- Origination/lender charges
- Preferred attorney fees including title work
- Appraisal fee (this will be collected when your appraisal is ordered by a third party.)
- Homeowners insurance / builders risk insurance
- Flood Insurance (if applicable)
- Recording Fees
- Any property taxes due paid in full prior to modification Overage construction costs (if you exceed the cost of your build, you will have to provide proof of payment made in full to your builder prior to modification)
This is a general list of out of pocket expenses and may vary. Discuss with your lender.
What if my construction loan takes longer than 12 months?
Your loan can be extended if it takes longer than 12 months to complete construction with a maximum construction time of 18 months. Extension fees will be applied based on which C2P program you are using.
When do my payments start? Do I pay anything during construction?
Payments can start as early as 1 month after closing. As the builder takes more draws, your interest payment will increase. If we refinanced your land loan into your C2P loan, you will no longer have that separate payment since it will be included in your construction payment.
Was your question not answered? Contact us!
Each borrower and situation is unique. If we didn’t answer your question about our construction to permanent program please email us or call us at 844.AGSOUTH.