New Construction Financing: What Realtors Need to Know
New construction purchases have unique financing considerations — extended timelines, builder contracts and addenda, construction-to-permanent loans, and end-loan qualification.
What You'll Learn
- Types of new construction financing (end-loan vs. C2P)
- Builder contract and addenda review
- Rate lock extensions for extended construction timelines
- Builder incentives and interest rate buydowns
- Certificate of Occupancy (CO) requirements
The Full Explanation
CTC Processing handles new construction files with extended processing schedules. We track builder timelines, alert on rate lock risk, and coordinate the CO and final inspection before closing.
Frequently Asked Questions
What is the difference between an end-loan and a construction-to-permanent loan?
An end-loan is a permanent mortgage placed after the home is built — the buyer waits until the CO is issued and then applies. A C2P is a single loan that funds construction then converts to permanent at completion.
How do I handle rate lock for new construction?
If the build takes 90–180+ days, a standard 45-day rate lock won't work. Options: extended rate lock (higher cost), float-to-permanent, or lock at the end when CO is imminent. CTC models rate lock strategy for every new construction file.
What builder incentives should buyers watch out for?
Builder incentives tied to using the builder's preferred lender. These offers are often competitive, but buyers should compare total costs — some builder lenders offer rate buydowns that are worth more than the incentive from choosing an outside lender.