Residential Construction Loans
Thinking about Building a New Home?
With a CUB Residential Construction loan, you can purchase your lot and finance your construction in one loan. The loan covers the lot, the materials, and work on the home, along with permits, landscaping, and many other expenses related to the building of the home. We also consider major home renovations as residential construction loans. Once your house is complete, you can apply for a permanent mortgage with CUB's Mortgage department.
What is a Residential Construction Loan?
A residential construction loan is a short-term loan used to fund the construction of your home, from the purchase of your lot to completion. During the construction, you may only be required to pay the interest on the loan.
To qualify for a Residential Construction loan, your home must be an owner-occupied primary residence or second home and must be a one-unit, single-family detached home. You will also be required to use a licensed builder to construct the house.
How does it work?
You will complete a loan application similar to a regular mortgage application. In addition, you will need to provide:
- A copy of the Land Contract and the Deed (if applicable) for the lot you are building on
- A copy of the house plans with details
- A copy of the construction budget
- A copy of the construction contract with your builder
After the application is submitted, you will receive a Loan Estimate, which will detail the legal requirements for the loan. At the Closing, you will need to pay the closing costs and minimum down payment.
The construction loan will be set up on a draw schedule that will pay out funds based upon inspections of the completed work in progress. The Bank will send out a lender to inspect the house during various stages of the construction in order to approve the draws.
CUB will finance 80% of the "as-completed" appraised value of your house. We also require 10% (of construction budget) in liquid reserves for cost overruns. Your loan rate will be fixed.
Want to talk to someone about a Residential Construction loan? Come by or call our Customer Care Center at 866-633-4450 and ask to speak to one of our knowledgeable lenders today!
NMLS#756034 – Offers of credit are subject to credit approval.