1x Close– One closing, one set of fees. A loan to construct the property is provided with funding provided at certain milestones, payments are typically interest only through the construction period and converts to a permanent loan once the project is complete. The loan is disbursed according to a schedule negotiated with the builder based on the completion of milestones. The first disbursement can be for land purchase and subsequent disbursements can be for construction.
2x Close– Two separate closings, two sets of fees. You will need at least 10% down, more likely 20% down with a credit score in the 700’s. The first loan is for the land purchase and construction of the property. Payments are typically interest only with a full balance balloon payment due at the end of the term which can range from 6 months to 18 months. Unlike the 1x close programs, a 2x close construction loan does not have the end loan negotiated in advance and therefore a borrower must secure financing to pay off the balloon payment. The refinance of a construction loan is why its referred to as a 2x close program, The first loan is the construction loan and the 2nd loan is the refinance of the construction loan. You’re asking, why would I ever do a 2x close program and pay closing costs twice when I could do it once. Great question, and the answer is, if you qualified for the 1x close and the loan met your projects needs you would not do a 2x close. Often borrowers will do a 2x close because they want to self build, its rare to get approval for a self build on a 1x close construction program.
Conventional 1x Close- Excellent rates, fees and terms ranging from 10 years to 30 years. You must have at least a 700 credit score with 20% down, 720 score with 10% down.
FHA/VA/USDA 1x Close– If you’re looking for a construction loan with a lower down payment and lower credit score requirements a FHA/VA or USDA one time close construction program is what you may want to consider. These programs have down payments ranging from 3.5% for FHA, 0% for VA and USDA. Their credit score requirements are 620 minimum Fico score.
Rehabilitation Loans- Rehab loans are used for existing homes that need some repairs and not complete ground up construction. Rehab loans are offered from a variety of programs. Including FHA, VA and Conventional.
Jumbo 1x Close- Our Jumbo 1x close construction loans can finance a construction up to $3,000,000 with as little as 15% down.
Jumbo 2x Close- Our Jumbo 2x close construction loans can finance a construction and we can finance the end loan with multitude of jumbo loan options.
Builder or Self Build – Some programs may not have the option to self build, most of these programs require a licensed builder to be the project manager. Some options exist for self build. Another option would be to allow the builder to fund the project and we would finance the home as a end loan with typical financing as you would purchase any home.