Home Construction Loans

If you qualify for a loan supporting two mortgages at once, then you may choose to keep your current home until you move into your new home. If you are not approved with both mortgages, you may need to find an alternative living space while you build in order to sell your current home prior to the loan closing. Depending on your financial situation, the down payment requirements on the new loan may also necessitate selling your current home before closing on the new loan.

In general, the cost per square foot is a good tool to assess the overall cost of the project. We recommend you take the time to ask this question of the builders you are considering, as estimated costs may vary by builder. Also remember home projects often run over budget, therefore a 10% overrun is required as part of the loan; those costs are tracked as the last line item of your sworn statement.

We can tailor a solution for you. The land and construction costs can be combined into one loan, or we can facilitate them separately. The best option for you will depend on your timing. If you have floor plans ready and can get your sworn statement (document that shows all costs of the build) completed quickly, you may be able to do both transactions in one loan closing. If it takes more time to get the construction documents ready, or if the seller of the land will not wait, then you can secure the land purchase first and roll the construction loan into it later.

GreenStone’s loan options allow you to choose what’s best for you! You can use a licensed builder, do it yourself, or opt for a combination of both. Either way, builders’ risk insurance will be required, and the costs budgeted for the project need to be adequate, in the event a builder would need to finish the project.

We can lend up to 80% of the lower of the as-will-be appraised value, or the cost to build plus land value, or up to 95% of the value with Private Mortgage Insurance (PMI) approval. The appraised value is determined before closing based on the home plans and the land; the planned home will be valued as if the home were already built. At closing, we will collect the entire down payment for the construction cost, land payoff (if any), and closing costs. The amount the loan does not cover will be your down payment, which you will need to bring to closing. The down payment will vary based on numerous factors. For example, the more equity you have in the land, the lower your down payment requirement could be. The lower the home appraisal value in relation to its build cost, the higher your down payment may be.

View our disclosures page to see an example of the loan structure.

Draws are used to receive funds to pay your vendors and contractors throughout the home construction. We will provide you with a GreenStone construction specialist to assist you from loan closing through the completion of the project. All draws are submitted to the title company, and once approved, the funds are disbursed to the relevant party, which may be a contractor, sub-contractor, supplier, or yourself. You will work with the title company to decide whether funds are disbursed via check or direct deposit, depending on draw purpose and the title company’s available disbursement options. If documents are completed correctly, it generally takes 1-5 business days to receive a draw.

You have a few options if you have leftover funds after construction completion:

• Apply the remaining funds back to your loan principal and request re-amortization.
• Use funds to increase your cash savings (approval required).
• Put the funds toward additional improvements to the house or property, such as landscaping, a deck or patio, etc.

Variable Rate Option:

• Your loan interest rate varies during the home construction project as interest rates change. Once construction is finished, your loan will convert to a fixed rate mortgage. This conversion does not require a refinance nor a second closing.
• During the construction period, you will make interest-only payments on what has been disbursed at the time of the billing.
• You will have 12 months to complete construction before principal and interest payments start, and a rate conversion is required.

Fixed Rate Option:

• Your loan will be locked into a fixed interest rate during the construction period; that rate remains fixed at the same rate for the life of the loan.
• During the construction period, you will make interest-only payments on what has been disbursed at the time of the billing.
• You will have 6 to 12 months, depending on your loan product, to complete construction before principal and interest payments start. An extension can be requested if construction is not completed within the allotted time frame. With the extension request, a 0.25% fee may apply.

View our disclosures page to see an example of the loan structure.

GreenStone’s financing options follow general credit standards. Each applicant’s situation and credit history is unique, and each application is considered on a case-by-case basis. Some exceptions do apply, and we encourage you to discuss your situation with a GreenStone financial services officer.

• Minimum credit bureau score of 680
• No late payments in the last two years on installment debt such as auto loans, or in past year on revolving debt such as credit cards
• Bankruptcies, foreclosures, short sales, charge-offs, or similar situations within past four to seven years will be evaluated on a case-by-case basis