CONSTRUCTION TO PERMANENT: For new home construction, a construction to permanent loan with a draw schedule that converts into a standard type of 30 year mortgage when the home is completed.  This is otherwise known as a construction loan.

The Buyer of the new construction home obtains this type of financing.  They have one closing only, which is on the lot.  There is a “draw schedule” where funds are released to the Buyer by their bank to pay the Builder as the home is being built, at various scheduled stages.  The bank makes inspections before releasing draws to verify completion of items.  The Buyer only pays interest on the portion of funds that are released, not on what the overall price is.  Upon issuance of a certificate of occupancy from the town, the home is now deemed complete and the construction loan converts into permanent 30 year financing.  Down payment as low as 5%.

Sample Lenders:  

  • 20% Down Payment:  Chelsea Groton Bank & Savings Institute Bank
  • 5% Down Payment:  Putnam Savings Bank

END LOAN: For homes that the builder has completed or has substantially started. Standard type of 30 year mortgage. The closing takes place once the town issues a certificate of occupancy (CO) to the Builder. 

BUILDER CONSTRUCTION FINANCING: If the buyer cannot obtain a construction to permanent mortgage the builder may under certain circumstances provide construction financing. The Builder buys the lot and builds the home. When the home is completed, the customer buys the home from the Builder after obtaining a traditional type of 30 year mortgage which is an “end loan.” A non-refundable down payment is paid over to the builder after the buyer has received a mortgage commitment for an end loan and before the start of construction. 

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