One Time Construction Loan Lenders In Florida

Interest Rate Float-Down – The note rate at time of closing will be the interest rate for permanent financing, unless it’s eligible for an interest rate float-down during the loan’s modification to permanent financing. This process gives borrowers a lower final rate after float-down

• The current market rate is the lowest rate with the same cost basis (prior to LLPAs) as the note rate for the current product as offered by Florida Onetime Close Mortgage Lenders
• A float-down rate adjustment (1/8 of a basis point) will be added to the current market rate if eligible for an interest rate float-down at loan modification

Interest rate float-down eligibility is based on if the sum of the note rate and float-down rate adjustment (“final rate after float-down”) is:

• Less than the current market rate, the note rate will be reduced to the final rate after float-down
• Greater than the current market rate, the note rate will not change and is used for permanent financing

Example 1: The final request for disbursement is received, and the current market rate has improved since closing.

The current market rate plus the float-down rate adjustment is less than the note rate at time of closing. The note rate for this loan will be reduced during loan modification to the final rate after float-down (6.625%) if the borrower agrees to the reduction.

Example 2: The final request for disbursement is received, but the current market rate has worsened since closing.

One-Time Construction Loan: Parameters

The parameters below are for both Conventional and VA loan types.

• Maximum lock period = 90 days 
• Project and builder/contractor must be approved by Florida Onetime Close Mortgage Lenders
• 5% contingency of construction costs must be included in every project budget (Form C)
  • Borrower’s principal balance will be reduced by any unused funds from contingency fund
  • Contingencies are to be included in the initial loan amount and are used in case the construction costs are underestimated 
• 11 month maximum build period with 1 month modification period
• Credit documents cannot exceed 18 months at the time of modification
• $1,690 underwriting fee 
• A standard 1004 full appraisal is required
• Escrow waiver is required
  • Including loans failing HPML
• Modular homes are eligible
• Manufactured homes are eligible
• Up to 4 units maximum
• Unique properties as defined by Fannie Mae are eligible as long as the appraisal is able to show acceptable comparables (ex. Barndominiums) 
• Eligible for Hybrid with Paper Note closings
• Not subject to right of recission

INELIGIBLE

• Texas 50(a)(6)
• Co-ops and attached condos
• Temporary buydowns
• Principal reductions
• Appraisal waivers or appraisal alternatives
• Escrow holdbacks
• Title Review and Closing (TRAC+)
• Virtual and Hybrid with eNote closings
• Ultimate Loan Submission
• Florida Onetime Close Mortgage Lenders Loan Shield
• Correspondent Loans
• Owner Builders (on VA only)

One-Time Construction Loan: CONVENTIONAL PARAMETERS

• 15- and 30-year fixed 
• Fannie Mae – DU findings must be approve/eligible 
• Freddie Mac – LPA findings must be accept/eligible 
• Conforming and High-Balance loan limits 
• Primary, second home and investment properties 
• No minimum credit score
  • However, borrowers are ineligible if their credit score is below 620 AND, in the past 12 months, they have been 60 or more days late or more than one 30-days late on an installment loan.
• Max LTV/CLTV/HCLTV = 95%
• If the property is in a declining/risky market, it may be subject to a 10% LTV reduction based on the product’s max LTV. The following are indicators that a property would be subject to LTV reduction: 
  • Declining, over supply or over 6 months checked in the One-Unit Housing Trend section
  • SSR message 1020 is present on appraisal
  • The property is in a county that’s on the declining/risky market list
• Escrows must be waived
  • Escrow account will be ineligible during the construction period
  • Escrows will be set up at time of modification
  • Accurate tax and insurance amounts available after construction is complete

VA One-Time Construction Loan Paramters 

• 30-year fixed & 30-year Jumbo fixed 
• Fannie Mae – DU findings must be approve/eligible 
• Primary residence only
• Max loan amount = $4 million
  • Max loan amount is the lesser of the appraised value or the acquisition cost (acquisition cost includes the cost to construct plus the balance owed on the land)
  • Total loan amount cannot exceed the total acquisition cost, including financed funding fee
• Max LTV/CLTV/HCLTV = 100%
• Funding fee based on total acquisition costs
• VA split entitlement eligible
• No rehab construction – an existing property cannot be renovated using a One-Time Close New Construction loan
• Escrow accounts ineligible during the construction period
• No owner builders
• Borrower cannot receive cash back

VA REFINANCE LTV CALCULATION

LAND VALUE

LOAN STRUCTURE

Loans will be structured to move from construction financing to permanent financing with one closing

CONVENTIONAL

• Interest-only payments made during the construction period are based on the current amount drawn during the construction period
• Once the construction period and the modification to permanent financing has been completed, the borrower will pay principal and interest payments.
• Loan term begins at modification date

Example: A 30-year term loan with an 11-month build. At time of modification, the loan converts to a 30-year permanent financing loan.

VA

• Escrow waiver required during the construction period – no payments are required during the construction period as the interest-only payments will be included in the construction budget 
• The initial draw at closing will include the interest-only amount, land-only amount, property insurance, title date down fee and draw fees being withheld. These are included as part of the builder’s budget and hard construction costs
• The interest reserve is optional
  • The interest reserve, if included, must be within a 4% threshold of the loan amount 
  • If the interest reserve is not included in the budget, the OTC team will verify with the LO and Builder that they don’t want to include the interest reserve before proceeding
  • If they choose not to have the interest reserve included in the budget, then the borrower will be responsible for making the interest-only payments
• Once the construction period and the modification to permanent financing has been completed, the borrower will pay principal and interest payments 
• Loan term begins at note date 
• Construction period is “backed out” of the loan term 

Example: A 30-year term loan with an 11-month build. At time of modification, the loan converts to a 29-year and 1-month permanent financing loan.

BORROWER QUALIFICATION REQUIREMENTS

DTI

Borrowers must qualify with their current mortgage payment included in the DTI calculation or sell their current residence prior to closing to have it excluded. Any future income expected to be earned is not acceptable and cannot be used. 

OWNERSHIP INTEREST

• If any party involved in the loan transaction has ownership interest with the builder/contractor, it must meet the Interested Party Contribution Guidelines
• If the borrower has an affiliation with the builder/contractor, it is considered a non-arms length transaction and is limited to only primary residences
• Owner builders are allowed on conventional primary residence loans only

APPRAISAL EXPIRATION

• Full appraisal subject to plans and specs required to close One-Time Close New Construction loans 
• At the time of construction completion, an appraisal update and/or completion report (Form 1004D) must be completed
• Florida Onetime Close Mortgage Lenders will order the final inspection once the property is completed
  • All final inspections are completed through Appraisal Direct
• The final inspection fee must be disclosed on the CD and will be withheld by Florida Onetime Close Mortgage Lenders

LOAN MODIFICATION

Every loan will be modified to permanent financing once construction is completed according to the construction contract. Loan modification will convert the loan into a fully amortizing loan. Borrowers are required to sign the modification agreement. Once modification is completed, the final draw will be disbursed.

1. The modification process starts when the builder requests the final inspection from Florida Onetime Close Mortgage Lenders 
2. If construction is complete, Florida Onetime Close Mortgage Lenders will make the final draw
3. Florida Onetime Close Mortgage Lenders orders the appraisal update and/or completion report (Form 1004D)
4. Builder provides Florida Onetime Close Mortgage Lenders with the Certificate of Occupancy (must be provided before a modification package can be signed by the borrower)
5. Florida Onetime Close Mortgage Lenders analyzes if the rate is eligible for an interest rate float-down
   1. The borrower will be contacted by Florida Onetime Close Mortgage Lenders to discuss this option if they are eligible
6. Florida Onetime Close Mortgage Lenders drafts the modification package. Package will include the following:
   1. Loan amortization schedule
   2. First payment letter
   3. Loan modification agreement
7. Modification package is shipped overnight to the borrower
8. Borrower must sign the Modification Agreement within 12 months of closing
   1. If it is not signed within 12 months, the borrower is required to requalify
   2. Florida Onetime Close Mortgage Lenders will hold the final draw until the agreement is signed
9. If Florida Onetime Close Mortgage Lenders receives a fully executed and notarized modification by 3PM EST, a same-day wire can be completed
   1. Allow 7-10 business days from the final draw request for the wire to be disbursed

NOTE: At the time of modification, Florida Onetime Close Mortgage Lenders will compare pricing of the original note rate to the current market. For example, on a Conventional One-Time Close New Construction loan, we will compare original note rate pricing to today’s current market Conventional 30-Year pricing.

REQUALIFICATION

If the modification agreement is not signed within 12 months of closing, the following must be submitted for requalification:

• New income, assets, appraisal and credit documents
• Disclosures do not need to be redisclosed unless the borrower is denied during requalification
• Loan will need to be resubmitted to refinance the One-Time Close New Construction loan

One-Time Construction Loan Fees

There are additional fees associated with a One-Time Close New Construction loan file: 

• Construction Inspection Fee 
  • The number of draws is determined by Florida Onetime Close Mortgage Lenders (see Draw Schedule below)
  • All draw fees will be paid as a one-time fee at closing
  • Draws will have a $125 inspection fee per draw
    • The initial and final draws are excluded from the draw schedule
    • The fee will be paid to Florida Onetime Close Mortgage Lenders FBO Mueller
  • The Construction Draw fee will not be charged on any loans
    • It will show in the budget, but will not be reflected on the CD
• Project Review Fee – $425 fee paid to Florida Onetime Close Mortgage Lenders FBO CIS
  • If the loan closes, the $425 project approval fee will appear on the CD as a borrower paid fee
  • If the loan does not close, Florida Onetime Close Mortgage Lenders will pay the fee
• Construction Draw Fee – $195 cost collected by Florida Onetime Close Mortgage Lenders each time a draw is requested.

• Final Inspection/ Survey Fee – $400 for Conventional, $150 for VA
  • Borrower is responsible for paying this fee
  • Required on every One-Time Close New Construction loan and must be disclosed on initial documents 
  • Fee cannot be rolled into loan amount on a VA One-Time Close New Construction loan
    • The fee is included in the project budget

The One-Time Close New Construction specific fees will be disclosed in Section B of the Fees screen. The construction inspection fee will be zeroed out on a VA One-Time Close New Construction loan.

One-Time Construction Loan Taxes

Taxes submitted to be based on land and improvements including:

• Breakdown of calculation from title and supporting documentation
• Example: Appraised value x assessed value of 40% x millage rate

One-Time Construction Loan Disclosures 

• Purchase is shown if borrower is purchasing land at time of loan 
• Refinance is shown if borrower owns land, and a lien is being paid off
• Construction is shown if borrower owns lot and no existing liens being paid off

Product

• Construction period interest-only then permanent loan product
• Example: 7 mo. Interest-only, fixed rate 

Monthly P&I – Based on the amount that has been drawn on the construction loan

• If a down payment is provided, those funds will be used before drawing on the loan balance
• [(loan amount divided by 2) x interest rate] ÷ 12
• Example: $240,000 ÷ 2 = $120,000 x interest rate of 6.75% = $8,100 ÷ 12 = $675

APPROVAL PROCESS

BUILDER/CONTRACTOR APPROVAL

Please refer to and complete the Builder/Contractor Approval Package SEE BELOW for the requirements for the builder/contractor to be approved.

The builder/contractor must be approved by Florida Onetime Close Mortgage Lenders to be eligible to complete the project. The builder/contractor will be required to provide the following documentation:

• Contractor Questionnaire
• Copy of State Contractor’s license
• The Declarations page of worker’s compensation insurance or a Fully Completed Statement of Exemption from Worker’s Compensation
• Copy of a Valid Driver’s license
• Fully Completed Form W‐9 Signed and dated

The contractor must fill out the Builder/Contractor Approval Package

• 1-business day turn time for initial review  
• If additional information is needed to issue the approval, Florida Onetime Close Mortgage Lenders will reach out directly to the builder/contractor – additional 2-business day turn time

If the builder has already been approved by Florida Onetime Close Mortgage Lenders within the last 12 months, email the following to ConstructionApprovals@Florida Onetime Close Mortgage Lenders.com to prove prior approval:

1. Current borrower’s full name and loan number
2. Attach the builder approval package from the builder’s initial approval
3. Date of when the builder was approved
4. Insurance, state contractor licensing, and driver’s license must be current

Florida Onetime Close Mortgage Lenders will reissue the builder approval package for the new borrower and new loan 

Updated documentation may be required if expired within the 12-month window (e.g., builder’s insurance or licenses).

PROJECT APPROVAL

Please refer to and complete the Project Approval Package for the requirements for the project to be approved.

The project must be approved by Florida Onetime Close Mortgage Lenders. The project approval process can be started once a property is found and should be complete prior to the loan entering CTC. A $425 project review fee will be charged to the borrower.

The Project Review Checklist – Form D must be filled out by the client and sent back to Florida Onetime Close Mortgage Lenders with the following documents/information included:

• Signed Construction Contract – Borrower and contractor must both sign; contract amount must match total in cost breakdown.
• Cost Breakdown (aka Builders Budget) – Must match dollar amount included in the construction contract. A budget provided by Florida Onetime Close Mortgage Lenders or a breakdown from the builder may be used.
• Set of Plans – One full set of plans for construction and job specifications.
• Appraisal – Lender will order an appraisal based on the plans and specifications. If the plans have not been submitted, please indicate in the Expected Completion Date column your expected delivery date to the lender.
• Building Permits – Submission of building permits to lender — if pre-start activity has occurred, permits must be included.
• Pre-paid Information (Prepaid Accounting Information – Form D1) – improperly documented pre-paids will not receive credit.
• Draw at Close — Submit a fully completed and signed Construction Loan Disbursement Request/Authorization – Form E documenting the hard cost draw at close.

NOTE: If pre-paid information and draw-at-close figures are unavailable at time of initial submission, submission can proceed and Florida Onetime Close Mortgage Lenders will condition out for them to be provided. An appraisal is not a requirement to start the approval process.

• Florida Onetime Close Mortgage Lenders will issue the project approval back to the client 
  • 3-business day turn time for approval
  • If additional information is needed to issue the approval, Florida Onetime Close Mortgage Lenderswill reach out directly to the builder/contractor – additional 2-business day turn time 
• The final project approval will include:
  • Conventional: Finalized number of draws, initial draw at closing amount and balance the project budget 
  • VA: Interest-only mortgage payments during construction period, property insurance (during construction), finalized number of draws, initial draw at closing amount, draw fee and title update fees and balance the project budget 
    • Project budget amount is finalized when the loan is locked

NOTE: It is recommended that the VA One-Time Close Interest-Only Payment Calculator is used to ensure accurate figures are being used in the budget.

• If the budget is underestimated and more funds are required to complete the project than the amount secured by the contingency plan, the borrower may be required to provide the additional funds out of pocket

NOTE: The project approval fee is named Project Review Fee in Section B of the Fees screen.

CONSTRUCTION PREPAIDS

If borrowers need to pay for items prior to closing, such as windows or building permits, the payments may be considered a prepaid item. If prepaids are present, they will be listed on the Construction Budget or Prepaid Worksheet in the Project Approval Package. The earnest money deposit cannot be included in the prepaids on the budget. The following items must be provided for the borrower to get credit for these funds:

• Proof of receipt from the subcontractor or supplier AND
  • Acceptable proof of receipt will be in the form of a paid invoice from the business/individual providing the work/item(s) or a cancelled check from the borrower to the business/individual.
• Asset documentation to source and document the payment.

Prepaids will be categorized as Applied to the Contract or Paid Outside the Contract:

1. Applied to the Contract: These are prepaid items that the builder has included in the budget and contract to build the home. Because any unpaid amounts are being disbursed to the builder through the contract, these items do not need to be paid in full.
   • Example: The borrower orders custom windows for their house that have a longer lead time.  To not delay the build, they were ordered a few months before the builder normally would have. They’re included in the builder’s budget, so they are considered applied to the contract. The borrower paid $15,000 of the total $25,000 for the windows, and the remainder will be paid by the builder after Florida Onetime Close Mortgage Lenders disburses funds to them.
2. Paid Outside the Contract: These items are not part of the actual construction contract with the builder but are items the borrower has paid for outside of the builder’s contract that contribute to the construction of the property. Because the items are paid to a party other than the builder, to receive credit, they must pay the entire amount in full or have the remaining balance added to the budget and contract with the builder.
   • Example: The borrower is hiring their own architectural engineer to design the plans for the house and is paying them $10,000 for the design. Despite not being included in the contract or the builder’s budget, the borrower can still receive credit for those funds as long as they’re either paid in full or added to the contract and budget through an addendum. 

NOTE: The builder may include the sales contract deposit as a prepaid item. In these cases, the prepaid item will NOT be listed by Florida Onetime Close Mortgage Lenders as a prepaid item, as this would be double counting the sales contract deposit, and incorrectly reducing the cash to close.

MEMORANDUM OF UNDERSTANDING (MOU)

The MOU is intended solely to disclose and confirm Florida Onetime Close Mortgage Lenders’s construction loan disbursement requirements.

• Must be signed by the builder
• Must be signed by the borrower
• Not required for initial approval
• Must upload a completed copy prior to the initial draw being sent

SUBMITTING A ONE-TIME CLOSE NEW CONSTRUCTION LOAN

• 3.4 files will be imported as a standard wholesale loan 
• Loans are only eligible to be originated in the broker channel, not eligible on correspondent. 

Under the Loan Information, Mortgage Purpose, Types & Terms tab, the following information will need to be manually entered: 

• Initial Draw Amount
  • Amount can change in AWC status by the UW, but the value entered in File Import will be locked down at Setup/time of lock
• Amount of Existing Liens
  • One-Time Close New Construction purchase loans = should be entered as $0
  • One-Time Close New Construction refinance loans = amount of any existing liens on the lot 
• Original Cost
  • One-Time Close New Construction purchase loans = field is disabled for a purchase and the value will flow over from: (A) Present Value of Lot 
  • One-Time Close New Construction refinance loans = original amount the lot was purchased for 
• Number of Draws 
  • Default value will show based on the state and hard cost of construction  
  • This value will influence the construction draw fee in the Fees screen
  • This amount does not include the initial draw at closing
• (A) Present Value of Lot (lot purchase price)
  • One-Time Close New Construction purchase loans = original cost of lot 
  • Original cost field will be disabled with the same value in: (A) Present value of lot 
  • One-Time Close New Construction refinance loans = amount lot is valued at
• (B) Cost of Improvements 
  • Must be filled out for both purchase and refinance loans – cost of construction 
  • Hard cost of construction of the home – this value should be provided by the builder/contractor
• (A + B) Total 
  • Automatically calculated based on values entered in: (A) Present value of lot and (B) Cost of improvements fields
• Construction Period 
  • Minimum of 1 month and maximum of 11 months can be entered
  • If construction takes longer than 11 months, the borrower will have to requalify
• Date Acquired
  • This field will only appear on One-Time Close New Construction refinance loans
  • The day the lot was acquired should be selected in the calendar pop-up

  

• Under the Loan Information, Subject Property tab:
• New Construction and Land Contract Conversion checkboxes should NOT be checked

• When the loan purpose is selected as Construction Purchase:

• When the loan purposed is selected as Construction Refinance:
  • Rate and Term – Conv needs to be selected as the refinance purpose on Conventional loans

  

  • VA Cash-Out Type II needs to be selected as the refinance purpose on VA loans
    • If the lot was acquired within 12 months of closing, the checkbox will need to be checked
• Under the Real Estate Owned, Real Estate Details tab:
  • The value to be entered in the market value field is the amount the property will be worth once construction on the home is complete
  • If a One-Time Close New Construction refinance, the lot (vacant land) being paid off should be marked as the subject property
• From here, fees will need to be checked, AUS will be run, initial disclosures will be generated for eSign, documents will be submitted and an appraisal ordered 
  • Any construction-related documentation needed will be conditioned for in Approved with Conditions status, and any additional inspections will be ordered and processed through Florida Onetime Close Mortgage Lenders
• Once the loan has entered CTC status, the borrower will be responsible for signing all closing documents and paying any closing fees 

One-Time Construction Loan: Draw At Closing 

After the loan closes, title will wire all funds for the initial draw to Florida Onetime Close Mortgage Lenders. Florida Onetime Close Mortgage Lenders will hold all funds in escrow and disperse to the builder after approval.

• Allow for 5 business days from the Florida Onetime Close Mortgage Lenders closing for the initial draw to be sent to the builder. Florida Onetime Close Mortgage Lenders will send a welcome letter and call the borrower and builder to prepare for initial draw and the beginning of the build process.
• Borrower signs all closing documents
• Florida Onetime Close Mortgage Lenders creates borrower account within their system
• Florida Onetime Close Mortgage Lenders disperses initial draw to builder

DRAW PROCESS FOR MODULAR/PREFAB/MANUFACTURED HOMES

• Modular/prefab/manufactured homes typically request 25% as an upfront deposit against the total cost for takeoffs and to start the fabrication process
• Once the modular/prefab/ manufactured home is completed at the warehouse, 65% of the cost will be disbursed to the builder with proof that the modular/prefab/ manufactured home is completed
• The remaining 10% of the modular/prefab/manufactured home cost is held back until the modular/prefab/ manufactured home is delivered on site, dropped from the truck to the foundation, and completed by the contractor

NOTE: For modular/prefab/manufactured Homes, a 10/80/10 draw schedule can be utilized

BROKER ONE-TIME CLOSE NEW CONSTRUCTION LOAN BEST PRACTICE CHECKLIST

BUILDER’S RISK POLICY 

• The borrower or the contractor listed as the insured party 
• Subject property address or description
• Effective date of policy
• Policy premium
• Coverage amount is greater than or equal to the cost of construction
• Florida one-time close mortgage lenders listed as the mortgagee clause
• Insurance company must have an acceptable company rating according to investor guidelines

HOI QUOTE

When the borrower is using a builder’s risk policy, the borrower must provide a HOI quote to document the accurate insurance payment once the property has been completed. The following items must be present:

• The borrower must be listed as the insured party
• Subject property address or description
• Effective date of policy
• Policy premium
• Coverage for conventional loans must be based on the replacement cost, documented by a policy endorsement or verbiage within the policy that indicates the property is settled at replacement cost 
• Coverage for VA loans must cover the lower of the Cost of Improvements or the total loan amount
• Insurance company must have an acceptable company rating according to investor guidelines

NOTE: Builders risk insurance and Borrower HOI will not be debited from the wire. The builder is responsible for paying the insurance

FOR CD RELEASE

To release the CD, the following items must be present:

• A tax bill based on the land and improvements, including calculation and supporting docs
• If not available, a third-party tax estimate based on improved value will need to be provided
• A homeowners insurance quote (not for builders’ risk)
• Underwriting approval on the appraised value of the loan