When you’re looking for a loan to build a home, there are many steps to the process and Patriot is here to help you every step of the way. We want to make your dream of building your very own, custom dream home, a reality.
What is a construction loan?
A construction loan is a first-mortgage loan that is divided into two phases: a 6 month construction phase followed by an end loan that would be chosen from our suite of conventional mortgage loan products, including a 30 or 15 year fixed mortgage or our 5/1 adjustable rate mortgage.
Our construction loans also include these benefits:
- Up to 95% loan to value financing*
- Easy online application
- Streamlined builder approval and draw process
- Great low interest rates- View our Current Rates
- Low closing costs
- Choose from various construction loan interest rate and term choices to meet your needs
- Single settlement loan, unlike some other construction loans which require two settlements – one for each phase of the loan
How does a construction loan work?
Construction mortgage loans have multiple parts, besides the usual pre-approval and closing. Extra steps you need to know about include:
Builder Approval:
All builders must be approved by Patriot’s Director of Residential & Commercial Lending. Construction loan builder approval guidelines:
- Builder must have built at least 3 complete homes for a profit in the last year
- Builder must submit personal and corporate income taxes from the previous two calendar years and a Profit and Loss balance sheet
- Personal and Business credit reports must show a satisfactory history of repaying creditors and suppliers
Draw (or Disbursement) Schedule:
During the 6 month construction phase, the funds are dispersed in a draw schedule as work is completed. The draw schedule will look like this:
- Land Acquisition draw
- First Draw – Slab/foundation
- Second Draw – Framing and rough carpentry
- Third Draw – Roof and mechanicals
- Fourth Draw – Exterior and interior finishes
- Fifth Draw – Trim-Out
- Final Draw – Project closeout
Have more questions?
Patriot prides itself on being a convenient place in our communities that is able to provide access to mortgage loans that not only meet your needs, but are originated by staff who care. All mortgage loan decisions are made locally, right here in your community. All of our mortgage loans are offered online and at our branches throughout Chambersburg, PA, Waynesboro, PA, and Hagerstown, MD.
We care about the communities we’re in, so we want to make it easy for members of these communities to achieve financial life goals, like building a new home. Patriot’s mission is “People Helping People – Not for Charity, But for Service.” Stop by one of our branches in Chambersburg, PA, Waynesboro, PA, or Hagerstown, MD today to discuss your construction mortgage options with one of our friendly and knowledgeable mortgage officers.
*Construction loan is available for first mortgages only. Maximum loan to value (LTV) is 95% up to $417,000. Sample construction mortgage of $150,000: Interest only payments on the principal amount drawn at a rate of the Prime Rate plus a margin of 1% for 6 months. 30 year fixed rate mortgage sample loan terms: Loan amount $150,000, interest rate of 3.990% (APR of 4.103%), Principal and Interest payments of $715.26. Escrows for Taxes, insurance and mortgage insurance are not included. Mortgage insurance is required for any loan in excess of 80% LTV.
Builder/Contractor must meet approval guidelines. All loans subject to credit approval.
Additional terms and programs available, call for details.