How Does a Construction to Permanent Mortgage Work?


  • A Construction-to-Permanent “one time close” mortgage loan involves only one application and one closing that covers both the construction phase and the permanent mortgage and has one rate set for both.
  • The construction phase of the loan has interest-only payments. The bank will set up a disbursement schedule which are the payments made to your builder as the work gets completed.
  • An initial loan disbursement is made at closing if you are also purchasing the property (land or a knock-down) on which to build.
  • If you have a loan on the property that you’re building on, the first disbursement of the construction loan will pay-off that loan before construction starts.
  • When the construction phase is complete the construction loan converts over to a permanent fixed-rate mortgage.



Contact Arthur
LinkedIn.com/in/arthuranda
201-741-1537 talk/text
Prospect Street Leonia, New Jersey 07605