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One-Time Close Construction Loans in Colorado
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What is a Construction loan? A one-time close construction loan is a type of loan that allows you to finance both the construction of a new home and its permanent mortgage in one single closing.
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Down Payment Requirement: Typically, a 3.5% down payment is required for this loan. USDA requires 0%(Rural areas). Depending on which program is chosen, land equity may be used towards this amount.
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Quick Close: On average, the loan process takes around 30 days for closure.
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Builder Approval: The builder must be approved; self-construction isn't allowed.
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Payment Suspension During Construction: Borrowers do not make payments during the construction phase; payments begin once construction is completed. There is no need to re-qualify at the end of construction.
Phases:
Outlined below are the pivotal stages of the construction loan process.
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Phase 1 (Approval):
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Pre-Approval: Obtain pre-approval for the loan.
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Land Acquisition: Identify and secure the land for construction.
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Builder Selection: Choose a builder, who must either be pre-approved or undergo an approval process.
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Quote: The builder provides a comprehensive quote covering all aspects of home construction.
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Phase 2 (Construction):
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Closing Period: If land is purchased, the initial draw covers land acquisition costs within 30 days.
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Commencement of Construction: After loan approval and closure, construction begins according to the agreed plans.
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Phase 3 (Fund Disbursement):
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Funds Disbursement: Lenders release funds to cover material, labor, and other expenses in stages known as "draws." There may be up to four draws without additional fees; thereafter, a fee of $175 per draw applies.
​Phase 4 (Inspections and Completion):
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Final Inspections: The final phase involves construction completion, final documentation, and an appraisal to ensure the property's value meets the permanent mortgage requirements.
​USDA One-Time Close Construction Loan
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0% Down Payment: The USDA One-Time Close Construction Loan is a great option for homebuyers looking to build their dream home in rural areas with no down payment. Like the FHA 3.5% down loan, the USDA loan offers a streamlined construction-to-permanent financing process that simplifies building and financing your home. However, with USDA loans, there is no down payment required, making it a more accessible option for eligible buyers.
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Eligible in Rural Areas: This loan is specifically designed for rural and suburban areas, promoting homeownership in these communities: USDA Eligibility Map
