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One-Time Close Construction Loans in Colorado

  • What is a Construction loan?  A one-time close construction loan is a type of loan that allows you to finance both the construction of a new home and its permanent mortgage in one single closing. 

  • Down Payment Requirement: Typically, a 3.5% down payment is required for this loan. Land equity may be used towards this amount depending on which program is chosen.

  • Quick Close: On average, the loan process takes around 30 days for closure. 

  • Builder Approval: The builder must be approved; self-construction isn't allowed. 

  • Payment Suspension During Construction: Borrowers do not make payments during the construction phase; payments begin once construction is completed. There is no need to re-qualify at the end of construction. 

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Outlined below are the pivotal stages of the construction loan process. 

Phase 1 (Approval): 

  • Pre-Approval: Obtain pre-approval for the loan.

  • Land Acquisition: Identify and secure the land for construction. 

  • Builder Selection: Choose a builder, who must either be pre-approved or undergo an approval process.

  • Quote: The builder provides a comprehensive quote covering all aspects of home construction.

Phase 2 (Construction): 

  • Closing Period: If land is purchased, the initial draw covers land acquisition costs within 30 days. 

  • Commencement of Construction: After loan approval and closure, construction begins according to the agreed plans. 

Phase 3 (Fund Disbursement): 

  • Funds Disbursement: Lenders release funds to cover material, labor, and other expenses in stages known as "draws." There may be up to four draws without additional fees; thereafter, a fee of $175 per draw applies. 


Phase 4 (Inspections and Completion): 

  • Final Inspections: The final phase involves construction completion, final documentation, and an appraisal to ensure the property's value meets the permanent mortgage requirements.

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