Residential Construction Loans

Construction Loan Calculator for Builders of all Kinds with today's interest rates with today's interest rates

One Time Close

With a one-time close construction loan, you finance both the construction and the long-term mortgage for your new home at the same time in one transaction.

Two Time Close

With a two-time close construction loan, you have two separate loans for the construction of your new home. First, you will have a loan for the construction, and then once the home is finalized this loan is paid off by a separate loan for the long-term financing.

Sales Price/Cost to Build

$

Down Payment Amount

$

Down Payment Percentage

%

Are you a Military Veteran?

Yes

No

Occupancy Type

Property Type

Household Members

Annual Household Income

$

Credit Score

State

Understanding Construction Loans

Summit Lending’s residential construction loans provide flexibility and offer a unique set of terms tailored to the building process unlike traditional mortgages. For county-specific costs in Wyoming, Idaho, and Utah – including construction loan rates – use our construction loan calculator above.

What are Construction Loans?

Unlike standard home loans, they release funds in stages. In most cases, borrowers are only responsible for the interest on the funds drawn until the project is finished.

One-Time Close vs. Two-Time Close Loans

One-Time Close Loans

Combine the residential construction loan and the permanent mortgage into a single loan allowing the borrower to lock in interest rates at the start.

Advantages:

Single set of closing costs.
Financial predictability, since Interest rate is set before starting construction.
One application and one closing for a streamlined process.

Disadvantages:

Less flexibility to change terms or lenders after construction.
Potentially higher initial rate than a two-time close loan.

Two-Time Close Loans

Involve two separate loans and closings: One for the construction phase and another for the permanent mortgage. There may also be different construction loan rates for Utah, Wyoming, Idaho, and other states.

Advantages:

Flexibility to shop for better rates later.
Lower permanent mortgage rate potential, if market changes.

Disadvantages:

Undergo approval and closing costs twice.
Risk of not qualifying for permanent financing.
Interest rate volatility.

Calculating Residential Construction Loans

Estimate your budget - Create a detailed construction budget with your builder, accounting for materials, labor, permits, and contingencies.
Get an appraisal - Lenders will require an appraised future value of the home in order to offer a loan.
Determining Loan-to-Value (LTV) Ratio - Lenders typically offer financing on a percentage of the lower of the appraised value and construction costs, requiring a down payment for the difference.

How to Go About Getting a Construction Loan

Prepare Your Finances - Lenders view residential construction loans as higher risk (because the house doesn’t exist), so your credit score, debt-to-income ratio, and other factors will have to meet a lender’s requirements.
Select Your Contractor - Choose an experienced, reputable builder. The lender will likely need to approve your selection.
Develop a Blueprint - In addition to a detailed construction budget, lenders will require a complete architectural plan.
Discuss Rates - Contact the experts at Summit Lending in Utah to discuss the construction loan rates and options.
Begin Underwriting - Submit your financial information, construction budget, blueprints, and appraisal for loan consideration.
Finalize the Loan - For a one-time close, you’ll do this once. if you’ll be financing the residential construction loan and mortgage separately (two-time close), you’ll finalize a second loan for the mortgage.

Lowering Your Monthly Payments

Increase your down payment
Select a longer-term mortgage
Shop for competitive rates

Conclusion

Construction loans offer a path to building your custom home. Careful planning and professional guidance will help you navigate the process successfully.