Financing: Construction Loans

Focus Homes can refer you to construction-perm (CP) mortgage lenders to help you with your custom home financing needs
The Focus Homes experts have a network of construction-perm (CP) mortgage partners that will find you the best loan for your custom home. Get started today!

Construction loans or construction-perm (CP) loans are pretty straightforward. These are short term, interest only, loans that are used by buyers while their new custom Focus Home is under construction. The easiest way to imagine them is to compare a credit card with a CP loan.

Let’s say your credit card has $5,000 in available credit. You have a balance of $1,000 at the end of month one. You are only charged interest on the $1,000 outstanding balance, not on the full $5,000 in available credit. At the end of month two, you have a balance of $1,500. You are only charged interest on the $1,500 outstanding balance, and so forth.

Let’s say you are building a new custom Focus Home using a CP loan of $450,000. In month one you payoff or buy your home site, pay for upfront government building fees (like permits and impact fees for example) and your new home has begun construction. Your balance at the end of month one may be $100,000. The interest the bank charges is on the $100,000 balance, not the $450,000 available credit. As each month progresses and more is completed on your new home, the outstanding balance on your CP loan increases. As a side note, Focus Homes will deal directly with the bank to obtain the regular “draws” from the CP loan (proceeds from the CP loan) to pay for labor and materials being used for your new home construction. Towards the end of your project, when the home is substantially completed and most of the loan funds have been used (usually just prior to closing), the interest due on the CP loan in a given month will be close to equal your new expected monthly home investment, but this amount does not include escrows like home owners insurance or taxes. At the end of your project your CP loan will be “modified” into your long term mortgage at the rate at terms agreed upon up front with your lender.

If you would like to learn more about CP loans complete a FREE online pre-qualification now, text or call (863) 640-2246, or contact us today!