One-Time Close New Construction Loan

BENEFITS

  • UWM is arming our partners to help more borrowers and first-time homebuyers make their first home or next home their dream home 
  • Builders don’t have to pay for the construction upfront, then sell the home to a borrower. They can create the borrower’s dream home and get a loan before construction even begins. Helping save time and money by only having to close once and covering one set of closing costs!
  • UWM’s process has a contractor approval component. Meaning we vet the contractor and obtain references to make sure they are credible. This helps give peace of mind to your borrower, that they have gone with a good option. 
  • Other lenders require intense documentation, high interest rates, and large down payments. UWM helps reduce the headaches, keep the project moving, create transparency and peace of mind for all parties involved, and offer the same great service on these loans, as we always do
  • After the first approval the borrower is good to go, no need to reapprove them!

What is a One-Time Close New Construction loan?

  • A One-Time Close New Construction loan is a single closing construction loan. The construction portion is short-term financing that is modified into permanent financing upon completion of the project. A single closing construction mortgage can be closed as a purchase or a refinance. 

What is a single closing? 

  • A single closing construction loan is the combination of financing of the construction and the permanent mortgage. There is a single closing transaction that occurs prior to construction beginning. 
  • Closing costs/fees that the borrower is responsible for are collected at closing. Funds are accessed through draws and there will be an initial draw at closing for proceeds to the contractor to begin the construction project.   

What is a One-Time Close New Construction Purchase Loan?

  • The loan purpose is a purchase when the borrower is not the current owner of the lot on which the home will be built. The borrower is using the loan funds to purchase both the lot and to fund the construction of the property. The loan amount includes the sum of the sales price of the lot and the cost to construct the property minus the down payment. 

What is a One-Time Close New Construction Refinance Loan?

  • The loan purpose is a refinance when the borrower already owns the lot in which the home will be built on. The borrower is using the loan funds to pay off any existing liens on the lot and to finance the construction of the home. The loan amount includes the sum of the any existing financing from purchase of the lot and the cost to construct the home. 

GENERAL TERMS

Construction Period – time frame between the initial draw at closing to completion of the construction of the property

Initial Draw (Draw at Close) – amount of funds to be disbursed at closing

  • On a purchase transaction, funds from initial draw are used to purchase the lot and to pay the contractor to begin the project
  • On a refinance transaction, funds may be used to pay off existing financing on the lot and to pay the contractor to begin the project

Draw Schedule – outline of the increments in which funds will be disbursed to the contractor in accordance with the construction contract

  • Funds are generally released to complete a certain percentage of the project throughout the construction period
  • Before each draw is released, an inspection is done to ensure progress is being made on the construction, a title search is done to ensure there are no outstanding liens and that the correct permits are drawn
  • 10 business day turn time for release of the initial draw once it has been dispersed from UWM at closing      
    • Business days are based on regular business hours of 8am EST – 8pm EST Monday-Friday
       

 

Construction Draw Fee – cost collected at closing to draw funds during the construction period is based on the hard cost of construction
  • The fee is determined during the project approval period and will be finalized between Granite and the builder/contractor 
Float Down – when the locked interest rate changed to a lower rate available at time of project completion 
  • If the borrower is eligible for a float down, the process is automatically complete

Once construction is complete, the loan is modified to a permanent financing.

Closing cost and any fees the borrower is responsible for are collected at closing.

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.

There are two options for this product: The Purchase option, and the Refinance option.

  • The Purchase option, the borrower is not the owner of the lot where the home will be built.
  • The borrower uses the funds to purchase both the lot and the construction funds in one transaction.
  • The loan amount will include the sum of the sales price of the lot and the cost to construct the property minus the down payment.

Refinance Option

  • The Refinance option, the borrower holds legal title of the lot.
  • The borrower is using the funds to pay off any existing lien on the lot and to finance the construction of the property.
  • The loan amount will include the sum of any existing financing from the purchase of the lot and the cost to construct the property only.

Please note the construction period can be up to 11 months.

If the construction period is 12 months or greater, the borrower will need to requalify.

PARAMETERS 

  • Fannie Mae only – DU Findings must be approve/eligible 
  • Maximum Lock Period = 90 days 
  • Project and builder/contractor must be approved by UWM/Granite
  • 5% of construction cost will be held for the contingency fund that is part of the project budget (Form C)
    • 10% of construction cost held in Texas
    • Included in the initial loan amount and is used in case the construction costs are underestimated 
  • 11 month maximum build period with 1 month modification period
  • Credit documents cannot exceed 12 months at the time of modification
  • .75% rate adjustment applied at time of lock to the rate selected in EASE 
  • $1495 underwriting fee 
  • Only weather related escrow holdbacks permitted
  • Eligible for Hybrid Close with paper note
    Recast options are available once the build is complete and the loan is in the modification period

CONVENTIONAL 

  • 15- and 30-year Fixed & 7/6 and 10/6 ARMs
  • Conforming and High Balance loan limits 
  • Primary, second home and investment properties 
  • Min FICO = 700 
  • Max LTV/CLTV/HCLTV = 95%

VA 

  • 30-year Fixed & 30-year Jumbo
  • Primary Residence Only  
  • Max Loan Amount = $4 million 
    • Total loan amount cannot exceed the total acquisition cost, including financed funding fee
  • Min FICO = 620 
  • Max LTV/CLTV/HCLTV = 100%
  • Funding fee based on total acquisition costs 
  • Borrowers cannot combine VA entitlement 
  • No rehab constructions – an existing property cannot be renovated using a One-Time Close New Construction loan
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