Section 4: Construction to Permanent First-Time Homebuyers
Purchasing Your First Home
Purchasing a first home is an exciting milestone in any person's life. For some, the process may also seem very intimidating. Buying a home can be challenging for a first timer. After all, there are so many steps, tasks, and requirements, and you may be anxious about making an expensive mistake. But first-time homebuyers actually enjoy some special advantages created to encourage new entrants into the real estate market. Please don't hesitate to give us a call or start your quote online.
How Much Home Can I Afford?
Typically, the first question would-be homebuyers ask themselves is, "What can I afford?" There are many factors that determine what a reasonable mortgage payment should be for an individual, including annual income, existing debt payments, down payment (if any), as well as additional costs like homeowners’ insurance and housing association fees. Orbit Home loans provides a handy VA Loan Payment Calculator to help homebuyers find a monthly payment that's comfortable for them.
Construction to Permanent Payment Calculator →
Contact an Orbit Home Loan Professional
What Type of Loan Should I Get?
There are many financing options available for homebuyers out there, each with their own unique advantages. For most borrowers, we at Orbit Home Loans highly recommend the working with one of our loan officers to find out what best fits your needs. Of course, if you are still researching then you can continue to explore our many loan options here on our website.
Advantages of a Construction to Permanent:
1. Credit
Credit score required to undertake a construction project is 620 or higher. And for many, this is just the minimum, as some lenders may require a score of 720 or better.
2. Line of Credit
For one, this kind of loan works like a line of credit in that you’re allowed to draw exactly the amount of money you need at the time you need it.
3. Interest
Another benefit is that you’re charged interest only on the amount you draw on during the construction phase. While your home is being built, you’ll only be making interest payments on the construction part of the loan — for up to 18 months. So your payments will be lower during this period than if you had taken out a different kind of loan. That kind of flexibility comes in handy, especially if the construction is taking longer than expected.
4. Single Loan
Perhaps best of all, you don’t have to apply, qualify, complete paperwork, or pay closing costs for two different loans. That can save you time as well as money otherwise spent on separate application and settlement fees.
5. Competitive Interest Rates
Additionally, for both the construction phase and the mortgage phase you can usually lock in a fixed interest rate up to 18 months in advance.
6. Lifetime Benefit
The ability to be able to build and bundle a home loan as one is a benefit you will have for your lifetime. Construction to permanent loans get you into one of the best loans which you will be able to use and benefit from for the rest of your life. This is a loan that you can use multiple times.
7. Appraisal
An appraisal is an opinion given by a licensed appraiser on the value of a property. The appraiser must follow set rules when appraising a property. The appraisal is just as important as your income, credit and assets when you’re applying for a construction loan. For new home construction, the appraisal is even more important than an appraisal for an existing home.
Getting Preapproved
The first step toward securing your loan is getting pre-approved. This involves a prequalification process, where a loan officer assesses the homebuyer's financial situation and determines what they qualify for and is followed by the homebuyer submitting a completed loan application to the lender for approval. Orbit Home Loans offers two ways to begin this process: You may either call us directly or reach start the application below to get a complementary call.
Contact an Orbit Home Loan Professional
Finding a Real Estate Agent
When using a Construction to Permanent, it's important to find a real estate agent that not only knows the intricacies of the CONSTRUCTION TO PERMANENT Benefit Program, but also understands the specific needs of borrower. Orbit Home Loans has put together a network of friendly real estate agents for just this purpose.
Learn More about Orbit Realty →
Helpful Resources
The Guide to Construction to Permanent Homebuying
Browse our VA homebuyer education and resources page.
Construction to Permanent Home Loan Mortgage Payment Calculator
This free VA Home Loan calculator gives you a snapshot of what your monthly payments could be with a VA Loan.
Construction to Permanent Glossary
Use our glossary to reference any unfamiliar terms or acronyms.
As a first-time homebuyer, you have many options when it comes to purchasing your home - including homes in high-cost areas.
Credit score required to undertake a construction project is 620 or higher. And for many, this is just the minimum, as some lenders may require a score of 720 or better.
2. Line of Credit
For one, this kind of loan works like a line of credit in that you’re allowed to draw exactly the amount of money you need at the time you need it.
3. Interest
Another benefit is that you’re charged interest only on the amount you draw on during the construction phase. While your home is being built, you’ll only be making interest payments on the construction part of the loan — for up to 18 months. So your payments will be lower during this period than if you had taken out a different kind of loan. That kind of flexibility comes in handy, especially if the construction is taking longer than expected.
4. Single Loan
Perhaps best of all, you don’t have to apply, qualify, complete paperwork, or pay closing costs for two different loans. That can save you time as well as money otherwise spent on separate application and settlement fees.
5. Competitive Interest Rates
Additionally, for both the construction phase and the mortgage phase you can usually lock in a fixed interest rate up to 18 months in advance.
6. Lifetime Benefit
The ability to be able to build and bundle a home loan as one is a benefit you will have for your lifetime. Construction to permanent loans get you into one of the best loans which you will be able to use and benefit from for the rest of your life. This is a loan that you can use multiple times.
7. Appraisal
An appraisal is an opinion given by a licensed appraiser on the value of a property. The appraiser must follow set rules when appraising a property. The appraisal is just as important as your income, credit and assets when you’re applying for a construction loan. For new home construction, the appraisal is even more important than an appraisal for an existing home.
The two options here are if the builder will finance or if the buyer will finance. Usually, when the builder is the borrower, they:
Credit score required to undertake a construction project is 620 or higher. And for many, this is just the minimum, as some lenders may require a score of 720 or better.
2. Line of Credit
For one, this kind of loan works like a line of credit in that you’re allowed to draw exactly the amount of money you need at the time you need it.
3. Interest
Another benefit is that you’re charged interest only on the amount you draw on during the construction phase. While your home is being built, you’ll only be making interest payments on the construction part of the loan — for up to 18 months. So your payments will be lower during this period than if you had taken out a different kind of loan. That kind of flexibility comes in handy, especially if the construction is taking longer than expected.
4. Single Loan
Perhaps best of all, you don’t have to apply, qualify, complete paperwork, or pay closing costs for two different loans. That can save you time as well as money otherwise spent on separate application and settlement fees.
5. Competitive Interest Rates
Additionally, for both the construction phase and the mortgage phase you can usually lock in a fixed interest rate up to 18 months in advance.
6. Lifetime Benefit
The ability to be able to build and bundle a home loan as one is a benefit you will have for your lifetime. Construction to permanent loans get you into one of the best loans which you will be able to use and benefit from for the rest of your life. This is a loan that you can use multiple times.
7. Appraisal
An appraisal is an opinion given by a licensed appraiser on the value of a property. The appraiser must follow set rules when appraising a property. The appraisal is just as important as your income, credit and assets when you’re applying for a construction loan. For new home construction, the appraisal is even more important than an appraisal for an existing home.
The two options here are if the builder will finance or if the buyer will finance. Usually, when the builder is the borrower, they: