Education Center

What should I know about a construction-to-permanent loan?

A construction-to-permanent loan combines construction financing and mortgage financing into one loan.

Determine if your property is eligible

For a construction-to-permanent loan, your new home must be an owner-occupied primary residence or a second home. The property type must be a one-unit, single-family detached home, and BB&T requires that you choose a licensed general contractor to build your home. For a renovation project, please consult your local mortgage professional.

Understand the specifics

With BB&T, you'll benefit from mortgage experts who will walk you through the entire loan process, so that when the time comes, you'll be able to choose from a wide range of permanent loan options to find the one that fits your needs.

  • BB&T does not require that you sell your existing home during the construction phase.
  • If you have owned your lot for 12 months or longer at the time of your loan application, your maximum loan amount is based on the full value of the property, rather than the original sales price.
  • You'll make interest-only payments on the funds drawn on your loan during construction.
  • There is only one closing, which means only one set of closing costs.
  • Generally, BB&T will require four to six inspections of your home during the construction phase. The total cost for inspections is predetermined with your builder, and the funds are disbursed at time of closing to cover this amount.

Know your upfront costs    

As with a standard mortgage, you'll need to have the appropriate down payment and funds to cover the closing costs.

It's fairly common for homeowners to make modifications or upgrades to their original plans during the home-building process. Consider whether you'd like to have this flexibility and plan accordingly—the homeowner is responsible for any cost increases that result from changes. Consult your BB&T Mortgage Professional for more information. Restrictions may apply.

Complete your application

When you're ready to start building, contact us, and a BB&T Mortgage Professional will walk you through the details. The process is similar to the standard home loan process. In addition to the usual required financial information, you may be asked for a:

  • Copy of the construction agreement with your builder, which must specify the cost of your home including options, upgrades and lot value
  • Land contract for the lot on which your house will be built, if applicable
  • Copy of the floor plan and facade of the house, if applicable
  • Deed to the lot, if applicable

Once we receive all the documentation, a decision is typically made within 48 hours.

Begin drawing on your loan

After closing, any remaining down payment money will be paid to your builder to start construction. Once these remaining funds are exhausted, you can begin drawing funds from your construction-to-permanent loan to pay construction costs.

Before the first draw on your loan, you'll need to provide BB&T Home Mortgage with a copy of a standard 12-month prepaid homeowner's insurance policy. It must include "builder's risk coverage." This coverage protects you from financial responsibility for any damage, theft or liability that may occur while your home is under construction.

You won't need to make interest payments until you begin drawing on your loan.

Keep it up. You're getting smarter about home buying.

Related topics

What should I consider before building a new home?

Simplify the process by knowing what to expect before you build a home.

Which loan type and term should I choose?

Deciding on a loan type depends on the amount of risk and monthly payment you're willing to accept.

When is mortgage insurance required?

See why lenders require mortgage insurance and how it impacts your loan.

What are points?

Learn how paying points can reduce your interest rate and monthly payment amount.

Loans, lines of credit and credit cards are subject to credit approval.

All BB&T mortgage professionals are registered on the Nationwide Mortgage Licensing System & Registry (NMLS), which promotes uniformity and transparency throughout the residential real estate industry. Search the NMLS Registry.

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