New-Construction Loans - South Main Mortgage

One-Time Close New Construction Loans

We offer One-Time Close New Construction for Conventional and VA loans.

This program help more borrowers and first-time homebuyers make their first home or next home their dream home.
Builders don’t have to pay for the construction upfront, then sell the home to a borrower. They can create the borrower’s dream home and get a loan before construction even begins. Helping save time and money by only having to close once and covering one set of closing costs!
Includes a contractor approval component. Meaning the contractor is vetted and provides references to make sure they are credible. This helps give peace of mind in that the contractor is a good option.
Other lenders require intense documentation, high interest rates, and large down payments. We helps reduce the headaches, keep the project moving, create transparency and peace of mind for all parties involved, and offer the same great service on these loans, as we always do
After the first approval the borrower is good to go, no need to reapprove them!
This program includes a budget analysis which ensures the costs that the contractor is quoting are reasonable for the area. Gives peace of mind that your project is properly budgeted for the build.
Once the build is complete, you can float down the loan to secure a lower interest rate if the market improves or stay locked in no matter the market shift.

What is a One-Time Close New Construction loan?

A One-Time Close New Construction loan is a single closing construction loan. The construction portion is short-term financing that is modified into permanent financing upon completion of the project. A single closing construction mortgage can be closed as a purchase or a refinance.

What is a single closing?

A single closing construction loan is the combination of financing of the construction and the permanent mortgage. There is a single closing transaction that occurs prior to construction beginning.
Closing costs/fees that the borrower is responsible for are collected at closing. Funds are accessed through draws and there will be an initial draw at closing for proceeds to the contractor to begin the construction project.

What is a One-Time Close New Construction Purchase Loan?

The loan purpose is a purchase when the borrower is not the current owner of the lot on which the home will be built. The borrower is using the loan funds to purchase both the lot and to fund the construction of the property. The loan amount includes the sum of the sales price of the lot and the cost to construct the property minus the down payment.

What is a One-Time Close New Construction Refinance Loan?

The loan purpose is a refinance when the borrower already owns the lot in which the home will be built on. The borrower is using the loan funds to pay off any existing liens on the lot and to finance the construction of the home. The loan amount includes the sum of the any existing financing from purchase of the lot and the cost to construct the home.

Construction Period – time frame between the initial draw at closing to completion of the construction of the property

Initial Draw (Draw at Close) – amount of funds to be disbursed at closing

On a purchase transaction, funds from initial draw are used to purchase the lot and to pay the contractor to begin the project
On a refinance transaction, funds may be used to pay off existing financing on the lot and to pay the contractor to begin the project

Draw Schedule – outline of the increments in which funds will be disbursed to the contractor in accordance with the construction contract

Funds are generally released to complete a certain percentage of the project throughout the construction period
Before each draw is released, an inspection is done to ensure progress is being made on the construction, a title search is done to ensure there are no outstanding liens and that the correct permits are drawn
4 business day turn time for release of a draw once it has been requested. Business days are based on regular business hours of 8am EST – 8pm EST Monday-Friday

Construction Draw Fee – cost collected at closing to draw funds during the construction period is based on the hard cost of construction

The fee is determined during the project approval period and will be finalized between Granite and the builder/contractor

Float Down – when the locked interest rate changed to a lower rate available at time of project completion

If the borrower is eligible for a float down, the process is automatically complete

Fannie Mae only – DU Findings must be approve/eligible
Maximum Lock Period = 90 days
Project and builder/contractor must be approved
5% of construction cost will be held for the contingency fund that is part of the project budget (Form C)
- 10% of construction cost held in Texas
- Included in the initial loan amount and is used in case the construction costs are underestimated
11 month maximum build period with 1 month modification period
Credit documents cannot exceed 12 months at the time of modification
.75% rate adjustment applied at time of lock to the rate selected in EASE
$1495 underwriting fee
Only weather related escrow holdbacks permitted
Eligible for Hybrid Close with paper note
Recast options are available once the build is complete and the loan is in the modification period

INELIGIBLE

CONVENTIONAL

30-year Fixed & 30-year Jumbo
Primary Residence Only
Max Loan Amount = $4 million
- Total loan amount cannot exceed the total acquisition cost, including financed funding fee
Min FICO = 620
Max LTV/CLTV/HCLTV = 100%
Funding fee based on total acquisition costs
Borrowers cannot combine VA entitlement
No rehab constructions – an existing property cannot be renovated using a One-Time Close New Construction loan