One-Time-Close Construction Loans

A construction loan is a special purpose loan that can be used to finance the purchase of land and construction costs (labor and materials) to build a new home.

Standalone Construction Loans

The benefit of a OTC loan is simply that. You close once, which means much lower total closing costs, less effort and less hassle, the other tangible benefit is that the rate is locked before closing and has an automatic float-down feature if rates improve. The automatic float-down feature protects the borrower from rising rates, while allowing the upside if rates were to fall.

What is a Construction Loan?

You Build your Dreams. We'll Finance them.

Click the button to start your approval process today

A simpler experience

Exhale Lending can offer One-Time-Close Construction Loans as standard conventional loans with up to 95% financing, and VA loans with up to 100% financing, to eligible borrowers.

What if I already own my land?

Prospective home owners that already own loan can still get a construction loan, however we treat this as a refinancing, not a purchase.

There are two main types of construction loan: "Standalone" and One-Time-Close construction loans.

Types of Construction Loan
Does the land need to be undeveloped?

Homeowner-builders are not limited to acquiring undeveloped land, as tear-down new-construction development is also permitted. This opens a range of possibilities in more urban and sub-urban areas.

Standalone construction loans are typically short-term loans that need be refinanced with regular financing after the construction has been completed. Because of this, they require two loans, two applications, two approvals, two sets of closing costs. And twice the effort and stress.
They also involve rate uncertainty, leading to exposure to rate movements or long, costly locks.

One-Time-Close Construction (OTC) Loans

Click the button to compare our OTC loan against the typical standalone construction loan.

Another benefit of Exhale Lending's OTC loans is that it modifies into a standard conventional amortizing mortgage loan (or VA loan, for eligible borrowers) which means our lender utilizes Conventional and VA underwriting guidelines. This means lower-down payment requirements and an easier mortgage experience.

Here's how it works...
  • How much can you afford? Work with Exhale Lending to establish your affordability and your budget. Click here to get approved.

  • Who and where? Identify your builder and find your site. If you need help locating a realtor or builder, reach out to Exhale today. We may have some referrals for you.

  • Builder Approval: Once you have identified your builder, Exhale will work to get them approved through our Lender. It's best to start this as early as possible.

  • Time to Dream: Work with an architect and design your custom home, or choose a spec home from your builder's portfolio.

  • Project Approval: Once the builder is approved and a project outlined, we will work on getting your project approved, too.

  • Loan Approval: After both builder and project have been approved, we then submit your loan into underwriting for credit, income and asset approval. From here it's just like any other loan.

  • Rate Lock: Prior to closing, we'll lock the loan to ensure your future payments are within expectations.

  • Closing Time: Exhale will work on getting your loan approved and Clear-to-Close.

  • Start paying your mortgage: You mortgage will need to be paid according to a schedule, and the amount will be based on a low Interest-Only payment, calculated using the locked interest rate and the outstanding drawn balance.

  • Construction Phases: As the builder completes certain phases of the construction more funds will be drawn from the account to cover labor and materials.

  • Site Visits: While all this is going on, you would be advised to make frequent site visits to ensure that work is progressing on time, and is being conducted to the highest of standards.

  • Certificate of Occupancy: Once the build is complete, the builder will obtain a Certificate of Occupancy to show that the work is done.

  • Loan Modification: On receipt of the Certificate of Occupancy, the lender will modify your loan from an Interest Only payment into a standard fixed rate Fannie Mae mortgage, or a VA loan for eligible borrowers.

  • Rate Protection: If rates at the time between project completion and the loan modification are lower then the original locked rate, your mortgage rate may be eligible for an automatic float down. If rates are higher, then your rate is already locked and safe.

  • Purchase the Land: As your loan closes, portion of the funds set aside will be used to purchase the land upon which the home will be built. This is your first "Draw".

    Note: If you already own the land, then we treat the project as a refinancing, not a purchase, but essentially works the same way.

Post-Construction / Modification
  • Get Living: Once the loan modification is complete, it's over to you get get living in your new dream home.

  • Refinance: Exhale will continue to monitor interest rates for you and will look for refinancing opportunities when the time comes. We do this for all our valued clients.

Eligibility Matrix

1 All loans over 80% LTV will require Mortgage Insurance.
2 Max LTV for 1 Unit Investment property is 85% for a Purchase transaction and 75% for a Rate/Term Refinancing.
3 Maximum LTV threshold will be reduced by 10% if the property is located in a declining/risky market, as defined by Lender.

Contact Exhale Lending for more information.

Exhale Lending's OTC loans modify into conventional mortgages and therefore carry the same eligibility requirements. The only significant difference is the the minimum Credit Score (aka "FICO") is floored at 700.

15 and 30 Year (Interest Only During Construction Period) Maximum 11 month Construction Period

Conventional Loans

1 Co-op Properties, Attached Condominiums, and Manufactured Properties not permitted.
2 Max LTV for 1 Unit Investment property is 85% for a Purchase transaction and 75% for a Rate/Term Refinancing.
3 Base loan amounts are not to exceed $4,000,000.
4 Principal Reductions not permitted
5 Borrowers cannot combine VA entitlement
6 Escrow waiver required during construction period

Contact Exhale Lending for more information.

30 Year Fixed and 30 Year Jumbo Fixed

VA Loans

1 When land is already owned by borrower, transaction will be treaded as a Cash Out (Type II) refinancing.