🔨One-Time Close Construction Loans | Mortgage Rates LIVE

Build smart from start to finish! We’ll cover today’s Daily Mortgage Rates and dive into One-Time Close Construction Loans, designed for buyers building a home with a single mortgage that covers both construction and permanent financing.

We’ll break down eligibility, benefits, and how these loans simplify the construction process. Perfect for buyers building from scratch or planning major home projects.

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The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as thousands of Non-QM mortgage loan program variations using alternative income documentation! 

Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!

Our team of licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as access thousands of mortgage programs using Alternative Income Documentation such as Bank Statement Mortgages...

Transcript

Today, we'll be talking about one-time close construction loans. So, earlier this week, we went over rehab loans. This is going to be a variation of that, and allows our borrowers to purchase land and then basically build a house from scratch. So, a lot of caveats within there, but it's an amazing program and concept, especially if the inventory is still a little low in your market. So, let's go ahead and I'll go ahead and switch my screen, and we'll check out the markets today.

So, the first thing we got is the ten-year Treasury. That's typically the best indicator of rates overall, especially because we're talking about all kinds of different programs: government, agency, conventional, commercial, non-QM, all kinds of different options. So, we just wanna see about rates in general. My face is a little bit there, but we are down days if I move it up there. And it went up, goes down, throughout the week, but I always wanna say, if we look at the full year, we're definitely down over the year, and mortgage rates just hit about a three-year low just late last week.

So, definitely a great time to be out there shopping. Standard rates for our standard programs here. So, our first option here, conventional primary — it's typically what you think of when you think of a mortgage. We always wanna consider the same scenario across every different option.

Our single-family home: $100,000 purchase, $300,000 loan amount, bonds to 60% loan-to-value, 760 credit score, 40% debt-to-income ratio. Those are the inputs here for all of the rates, where we can see the lowest possible rate options for all. So, our conventional primary coming in as low as 5.625%, final APR 5.857%, definitely lower than it's been. And, hopefully, it continues to go.

And FHA — I was hoping this would show as in the forest finally, which has been a few years since it's been down in the 4s. Hopefully later this week or later today. Well, coming in as low as 5%, final APR 5.913%. Remember that FHA does require upfront mortgage insurance, which does increase the final APR, which is a touch higher than conventional, which is pretty typical.

And our VA options for our veterans and active service members: 5.125% rate, and the final APR, 5.373%, because VA has much lower fees overall for our great benefits. So, if you are eligible, it'll be the best option.

And our USDA options — again, I was hoping it would show up for today, not quite there — but coming in as low as 5% flat, final APR. And if our borrowers are shopping in those USDA-eligible areas, those rural areas of the country, they'll typically be comparing that to FHA or conventional. And you see here, USDA is kind of the best option if your property and borrower are eligible.

And now we get into the funds. Here are non-QM programs. This is where the mortgage calculator offers our alternative options. So, this option allows us to use alternative docs for our primary home. Typically, our self-employed borrowers, a lot of times, have difficulty documenting their income fully or have a lot of write-offs, and they can't qualify for conventional, FHA, VA, and so on.

All-doc options allow our self-employed borrowers to use bank statements, 1099s, P&L statements — all different options here under all-doc. Our borrowers, especially self-employed, get a lot of flexibility. And rates as low as 5.875%. That's amazing. We're up over 6% for the last few years, so amazing. And final APR there, 6.145%. So you see, almost identical to conventional, just a touch higher, which is pretty typical to use alternative docs.

Our alt-doc option for investment properties: rates come in low 6%, final APR 6.31%. Not much change there. And our current investment properties — we'll compare that to same rate, 6%, final APR 6.311%, which is just a touch higher, pretty typical. And here, DSCR stands for debt service coverage ratio. No income or employment information is needed. Simply use the rents from the property to determine a DSCR ratio, which, if it can cover the expenses — aka, the property cash flows — that's a ratio over one, which is what's used for all these demos.

We have a three-year prepayment penalty on this first option. Rates coming in today: 5.999%, pretty amazing. Final APR is 6.222%, which beats conventional and our alt-doc option. And we can even add a five-year prepay to lower it a little bit more: five-year prepay as well, 5.875%, final APR 6.181%. Pretty amazing, beating the other options there.

And we do have a no prepayment penalty option coming in at 6% rate, final APR of 6.321%. And dozens of other programs here, but we're going to get into a very specific one-time close option, which allows our borrower to buy land and build a home with one loan, instead of a typical builder or investor having to get usually two loans. Our option here allows us to get one loan, one-time closing, to our final end loan for the home, which is going to be built in eleven months in our example. Let's go ahead and look at our demo here.

So, first off, in this case, it's an empty lot. So, I looked around the area here to find a lot that was going to be fairly affordable and allow us to build a decent-sized single-family home, which is the goal here. So, our lot here for sale in my local area: $335,000 for a 10,000-square-foot lot roughly, which is about perfect for a great example.

Now, if our borrower wants to purchase this land, they can include any of the build costs as long as the property appraises based on those plans. And we can get the in-loan based on our standard or VA guidelines in our two examples today. So, the two best examples here: first off, one-time close conventional option. This is a standard conventional loan, Fannie Mae/Freddie Mac type of loan, and allows us to buy the land and build a property.

And this is for this exact home at the standard 5% down that is afforded for anybody qualifying for our conventional options. So, it allows us to purchase the land, and what we assume — to zoom in a touch more so we can make it bigger — what we assumed here was a $500,000 build, resulting in a final cost of $835,000. And all we need to do to make sure that all these numbers work out is pretty simple: we need to get an as-is value and after-repair value. The after-repair value is what we're going to use for our actual appraisal value.

So, it allows us to finance up to 95% of the final ARV or 95% of the purchase plus repairs. For example, if the ARV comes back at $900,000 and we're only budgeting $835,000, that's amazing. The borrower is going to get a lot of equity in the home, but they still — they don't get, you know, money or cash out of the deal. They're still gonna have to contribute a percent of the $835,000 there. So, definitely a little bit of caveats there. I did mention before, this is an eleven-month timeline in this example, a year or less, because we're going to lock in a rate right now.

You will see that affords us our end rate when the home is finished — basically, this is going to be what the loan looks like when the loan is fully completed. So, I'm putting 5% down here of the final price. Project price is going to limit us here: $835,000 budget here that you see. And we're able to get a pretty amazing rate: 6.625% with 5.5 discount points in cost. Obviously, a little more cost here with these unique types of loans. And 6.875% affords us a little lower cost here of 1.5 discount points in cost. So, still some amazing rates here to still use the standard conventional options and affords us eleven months to build the home.

Some of our other assumptions here: one thing to note is that the PMI — the PMI in this case at a 760 FICO score — is going to be $218. Now, we wanna look at our other option here: same property, same scenario. Just wanna look at our other quick one-time close, which is for our VA.

We do have a VA option to put 0% down, go up to 100% financing, which is typical for VA options here. So, our VA, all the same scenarios there. We can only go up to 100% of the limits. In this case, the limit is going to be actual budgets. And we can put 0% down, 100% financing, rates as low as 6.37% APR one-time close, costing 2.0 discount points.

And lowest cost option here: 7% rate, has a 1.119 discount point cost. Again, that’s pretty standard — put 0% down if you're a qualified vet, build that home of your dreams from scratch. Just again, it has to make sure it gets done in eleven months. Obviously, the contractor has to be qualified, jump through a bunch of hoops, everything has to pencil out, everything has to be permitted — all that kind of good stuff. So, there's a lot of work. There's some pretty amazing options to open up opportunities for our borrowers.

Now, we could do a USDA one as well, but this property/location is not USDA eligible. Not many properties are, so I didn’t want to put that on this example. But these are pretty cool programs. Definitely get with one of our teammates. They’d be happy to send you the full info, a full itemized loan estimate of all the fees — everything that's needed.

But they are, again, great options, especially for the limited inventory that some of the markets may have. So, hopefully, that helps some of our borrowers. Pretty much three-year lows just last week. Rates go up and down by the day, but again, great news for everybody out there shopping. And get with one of our team members, and we can even help you with these unique one-time close or rehab loans like we went over last week. So, good luck everybody out there shopping, and we'll be back with another episode of Daily Rates Live.

Thanks, everybody.