Construction to Perm Loans

Photo: our Belford project, funded Capital City Home Loans

Funding Your New Custom Home

Most homeowners fund their new dream homes utilizing a loan product called Construction to Permanent Loan (CP for short). These loans start as a construction loan, which are interest only for typically 12 months (can be extended for larger/longer projects). Interest during construction is only paid on the amount drawn from the loan, so as construction progresses, your payment increases. Expect to have 15-25% of the total project value in cash (this will include land value if you own it outright). On higher value homes, most lenders will want to see a 1–2-year emergency fund in addition to the cash requirements.

At the end of construction, the loan then closes into a typical fixed rate mortgage that you are accustomed to. The rate and term length are decided at the start of construction.

Timeline

I do my best to help my clients avoid the sheer amount of time it takes to close a CP loan. Plan on 2 months, possibly more, from the time you first call the bank to the time you get your first construction draw to break ground. If you have a complex work history, or own multiple businesses, then plan on 3 months in our experience. Part of this process includes getting your builder approved with the bank, so don’t forget to loop them in.

Preferred Lenders

In Atlanta and need a CP loan? Consider the resources below. We get zero kickback from these people; they are listed here simply because our clients have had good experiences with them. My hope is that this may have some value to someone. It’s best to call several lenders to see who has the best rates, and capital requirements for your specific case.

Gary Welch | Capital City Home Loans | 770.314.0873 | gwelch@cchl.com

Gianni Cerretani | Presidential Bank | 404.213.9663 | gc@presidential.com

John Lee | Truist Mortgages | 404.394.0570 john.lee@truist.com