Construction to Permanent Loan

APCO Employees Credit Union now offers a Construction to Permanent Loan (sometimes called a C to P loan). It is a one-time close construction loan with flexible terms, designed to help you finance the building of your dream home!

With a one-time closing, your interest rate and the loan amount are set before construction begins. These loans offer a short-term, fixed-rate construction period which converts to a permanent fixed-rate mortgage upon completion of construction. The terms for both stages of the loan are set in advance, and all parties (Credit Union, member, and builder) will agree to a payment schedule based on certain milestones in the construction phase. During the construction phase of the loan, interest is charged only on the outstanding principal balance of the loan.

The loan will convert to a long-term mortgage upon completion of construction and inspection of the home. At this time, the borrower will commence making principal and interest payments at the previously determined rate. Appraisals and the loan amount are based on the finished property’s value.

Interested in a Construction to Permanent Loan with APCO Employees Credit Union? Take a look at the overview below and see if we’re a good fit.

Benefits of construction to permanent financing include:

  • One loan and one closing cover both the construction phase and the permanent financing. This streamlines the application process and can minimize closing fees.
  • Your rate and loan term are determined in advance.
  • Money is available when you need it during the building, according to the disbursement schedule.
  • Quick payments – after inspection of the work, funds are generally disbursed within a few days.

Let us walk you through the C to P Loan process

1. Application –We’ll have you fill out a mortgage application through our online portal. It is the same platform used for standard mortgages with your Credit Union. You may be asked to provide documents including bank statements, proof of income, and tax returns. There will likely be a cash down payment required. The loan will be reviewed based on receiving the following:

  • Detailed description of project specifications.
  • Complete set of building plans – This must be provided so the appraiser can determine the finished property’s value. The plans must include specifications of the finishes.
  • Cost Estimates – A detailed cost estimate from a licensed contractor which includes hard costs such as construction materials and soft costs such as incidental fees and services incurred during the home’s construction.
  • Time Frame – The construction to permanent loan allows up to one year for completion of the building phase.

2. After inspection of application materials, and once final approval is made, our mortgage team will assist you to close your loan and disburse funds.

3. Once construction is completed, our team will transition your loan to a permanent mortgage.

How to qualify for a C to P Loan

  • You must be a Credit Union member in good standing.
  • Provide proof of at least 20% of the cost of the project in liquid funds and an additional 10% for potential over budget items and change orders. If the lot is paid for in full, it may count towards this amount.
  • Secure a qualified builder that is licensed and insured.
  • A Credit Score of 720 is required.
  • Your Debt to Income (DTI) must not exceed 42%.

How to Apply

The first step will be meeting with a Credit Union representative to discuss the details of your project and answer any questions you may have. Once it’s determined we’re a good fit, you will be asked to complete a formal application through our online portal. The application typically takes 15 minutes to complete. For now, complete this form and a representative will get back to you.

Please see the FAQ below for additional requirements and information.

FAQs

Do I have to own my lot?

Typically, yes. The down payment must be met prior to the Credit Union’s extension of funds for the project. The lot is usually used as the majority of the down payment.

What counties and areas are eligible for building?

We currently serve Jefferson County, Shelby County, St. Clair County, Blount County, Walker County, Tuscaloosa County, Lake Martin, Smith Lake. Other areas will be added in the future.

Can I be the builder of my home?

No. The Credit Union only accepts pre-approved builders who are bonded, insured, and have required credentials.

Are there any restrictions on the style of home I can build?

The only restrictions are atypical homes such as underground, solar glass, or log homes.

Can I build a 4plex and live in one of the units?

No. We only finance single-family homes.

What will my interest rate be?

Interest charges during the construction phase will be Prime +1/2%. Payments during the construction phase are interest-only and will be billed monthly based on the outstanding balance. The permanent loan’s interest rate will be determined at the time your original application is accepted and you have signed all the disclosures.

How many draws and I allowed to make for funds during the construction process?

Six.