Construction-to-Permanent
loans

Overview

This guide covers one-time close construction to permanent financing — including how these programs work, what lenders look for, and how to get started. Qualification requirements vary by lender and program type. All loan programs are subject to credit approval and lender-specific criteria.

• Program availability varies by lender
• Qualification requirements vary by scenario
• Multiple program types available
• Speak with a licensed MLO for your situation

Getting Started

JumboLoan.com works with wholesale and portfolio lenders to provide access to programs not available at retail banks. Start our AI-assisted application or call us to discuss your scenario — a licensed MLO will identify the programs best suited to your situation.

• Start at AIMortgageApplication.com
• Licensed MLO reviews your scenario
• Multiple programs compared simultaneously
• NMLS# 1967971 — verify at NMLSConsumerAccess.org

One loan from groundbreaking to mortgage

The construction-to-permanent (CP) loan solves construction lending's awkwardest problem — needing two different loans for one house — by fusing them: a single closing funds the land and build through inspected draws, then the loan converts automatically into a standard mortgage the day construction completes. One application, one approval, one set of closing costs, and no requalification at the finish line. That last point is the quiet superpower: your permanent financing is committed before ground breaks, so a job change, a market shift, or a rate spike during the fourteen-month build cannot strand a finished house without a mortgage.

How the conversion works

• At closing: the full structure is documented — construction terms, draw schedule, and the permanent loan's terms (or the mechanism that will set them).
• During the build: interest-only billing on drawn funds, usually at a variable construction rate; many programs finance this interest inside the budget via an interest reserve.
• Rate treatment: the permanent rate is either locked at closing (with extended-lock pricing), set by formula at conversion, or lockable during a window near completion — this is the single biggest term to compare across lenders. Float-down options split the difference.
• At completion: the certificate of occupancy triggers conversion — the balance re-documents as your mortgage and amortization begins. No new appraisal of you; the deal was struck up front.

Modification-style conversions (the loan simply changes phase) are cleaner than replacement-style ones — ask which yours is.

CP versus the two-close alternative

The CP loan's advantages are certainty and cost: one set of closing costs, no requalification risk, and a permanent rate you can protect through the whole build. Its trade-off is flexibility — you have committed to this lender's permanent terms, and if market rates fall sharply during construction, a locked CP without a float-down watches the improvement pass by (refinancing after completion remains possible, at a cost). The two-close structure inverts the trade: full freedom to shop the permanent loan at completion, purchased with a second closing and full exposure to rates and requalification. Risk-averse borrowers and long builds favor CP; rate optimists with bulletproof finances sometimes prefer two-close. We quote both structures on every construction file so the trade-off is priced, not guessed. NMLS# 1967971.

Quick answers

What documents do I sign at conversion?

On modification-style CP loans, typically a brief modification agreement — sometimes nothing at all. Replacement-style conversions re-document more fully. Ask which style before closing.

Can the permanent phase be an ARM?

Yes — CP programs offer fixed and ARM permanents; the choice is made (and priced) at the original closing.

Does the appraisal happen twice?

Once, as-completed from plans, at origination — plus a final inspection confirming the home matches them. No fresh valuation at conversion on standard CP structures.