Construction Loans CA

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Construction Loan Types Overview

Construction Loans CA offers a wide variety of loan types to meet your needs. Read below to find out more about what type is right for you, and feel free to contact us with any questions.

Owner Builder

For homeowners who want to be their own contractor, there are Owner Builder Loans. Owner Builder Loans are a great way to control costs, stay on schedule and gain equity at the completion of construction. They may be used to build a primary residence or a vacation home.

Owner Builder Loans are available for people with credit scores as low as 620. Some of our popular programs offer:

loan amounts up to $3,000,000 one closing no application fee stated and full documentation loans no payments during construction control of draw schedule 100% financing for primary residence 95% financing for second home

Most lenders require an owner builder who is not a licensed contractor or employed in a construction related trade to hire a site supervisor to assist with the building of the home. The consulting fees for the site supervisor are far less than the standard 10% to 25% that a general contractor charges.

Click here to learn more about becoming an Owner Builder

Lot Loans

Land or Lot Loans provide financing for the purchase or refinance of land.

A Purchase Lot Loan is a good choice if you find the perfect lot but you need some time to design your home and hire a contractor. Purchase lot loans are available for primary residences or second homes on the following terms:

up to $1,000,000 loan amount down payments as low as 10% full or stated documentation debt to income ratio up to 45%

For people who already own their lot, Rate and Term Refinances are available on the same terms as purchase lot loans.

We offer lot loans amortized for 30 years and due in 2 to 5 years. Fixed and adjustable rate programs are available and many have interest only payments. Some of the popular programs are:

• 30/5 LIBOR ARM - interest only for 5 years
• 30/5 12 MAT ARM - interest only for 5 years
• 30/2 fixed rate - interest only for 2 years
• 30/5 12 MAT ARM - principal and interest balloon
• 30/5 6 month LIBOR ARM balloon
• 30/2 fixed rate balloon

Although there are combination loans that will finance the purchase of the lot and construction costs, most of the time you will need to purchase the lot separately. This is because combined loans, called "One-Time Close" loans, require at closing the approved building plans and an itemized cost-breakdown for construction. It usually takes at least 6-8 weeks to hire a contractor and get approved plans. Most of the time, sellers are not willing to delay the sale of a lot so that you can get these things done. The exception is when you purchase a lot from a builder who has plans that are acceptable to you. If this happens, then you can get a One-Time Close loan to finance the purchase of the lot, the cost of construction and the permanent financing once the construction is completed. If you purchase the lot separately, then it can be refinanced into the loan that will finance the construction and the permanent loan.
Tips on Purchasing a Lot
More information on Construction loans

One-Time Close Loan

Traditional construction loans were short-term loans that only financed the cost of construction. Today, there are combination loan programs that wrap multiple loans into a single application and closing. They are called "One Time Close" , or In construction costs and then to get a permanent "Single Close" , "Construction to Permanent" or " CTP " loans. With a single closing, financing is provided for:

1. Lot purchase/refinance
2. Construction costs
3. Permanent or end loan

The benefits of one closing are:

• One application
• One set of closing documents
• Reduced closing costs
• Permanent mortgage is secured at the start of construction
• Loan amount based upon projected future value of home

If separate loans were obtained for purchasing the lot, financing the construction and financing the end-loan,then closing costs would be incurred for each of the separate loans. This would result in multiple applications, closing documents and charges for appraisal, title insurance and escrow. Securing the permanent loan prior to the start of construction also protects you in the event that real estate prices or your income decline before the completion of construction. Such declines could affect your ability to qualify for an end-loan. Features of the One-Time Close program are:

may be used to build primary or vacation home
finances up to 100% of construction costs
no payments during construction
fixed and adjustable programs
stated and full documentation
available for self-employed borrowers

Click here for more information on One-Time Close loans

Commercial Loans

For commercial builders, there are many different asset-based loan programs. Some of the popular programs that we offer are for spec loans and financing subdivisions.

Spec Loans

"Spec" is short for a "speculative" loan. Spec loans provide financing for investors and builders to build homes that they intend to sell upon the completion of construction. Like most commercial loans, they are asset based and do not depend upon credit scores or debt to income ratios. Instead, they are based upon the experience of the builder, the marketing plan and submission of income documentation establishing that the borrower's business is profitable.

Click here for more information about Spec loans

Subdivisions

A line of credit is great for financing subdivisions of up to 30 homes. Some of the features of the line of credit that we offer are:

up to 90% of the LTC (Loan to Cost) or 80% LTV (Loan to Value)
loans made to corporations, partnerships, trusts and LLC's
partial releases for sold homes
lot draws of up to 75% of land value
terms up to 24 months
no payments during construction
no credit score required

Click here for more information about Commercial loans

Remodeling/Rehab Loans

If you are planning to remodel an existing home or to purchase and rehabilitate a new home, then a "Remodeling/Rehab Loan" may be the solution for you.

For homeowners looking to do a substantial remodel, garage conversion, room addition or other large-scale renovation, a Remodeling/Rehab Loan pays off your existing mortgage and gives you the money that you need for your project. This loan does not require equity because it is based upon the future value of the improvements.

A Remodeling/Rehab Loan can also be used to purchase property and to finance the cost of remodeling it. If you find the perfect "fixer-upper" or "tear down", a Remodeling/Rehab Loan lets you purchase the property and turn it into your dream home.

Features of the remodeling/rehab loans that we offer are:

• Loan amounts up to $5,000,000
  
• No prepayment penalties
  
• No seasoning of funds
  
• Reduced documentation loans

Click here to learn more about Remodeling/Rehab loans

Home Equity Line of Credit

If you have equity in your home, then a Home Equity Line of Credit may be a great way to finance remodeling costs. A home equity line of credit offers the following:

• interest only payments
  
• flexible revolving credit
  
• lower rates than consumer credit cards
  
• easy access to funds through convenience checks or a credit card
  
• lower closing costs
  
• interest accrual only on withdrawn funds
  
• repayment terms up to 30 years
  
• possible tax savings

If you want us to run the numbers and provide you with the different ways to finance your home improvements, then give us a call toll free at: 1-800-438-2704.

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