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We can help with your construction to permanent home loan.

Ready to build your dream home? A Y-12 FCU Primary Residence Construction Loan is the way to go. Why? Unlike other types of new construction mortgages, our loan allows you to lock your interest rate and close your loan before construction is even started. This is a one-time closing with no need to re-qualify for the permanent phase. It will provide you with a line of credit so that you can pay the builder, contractors, suppliers, and all the necessary craftsmen during the construction process. When construction is complete, the construction loan converts to a permanent home loan. At this point, scheduled monthly payments of principle and interest plus escrows, if applicable, will take effect.

Understanding the specifics:
  • Permanent financing rate is locked in at time of construction closing. Construction rate is 1% above the qualifying permanent financing rate.  
  • Qualifying minimum score for FICO is 680. 
  •  Y-12 FCU will allow fixed pricing or cost-plus builders contracts.  Borrowers who choose a cost-plus must show adequate minimum liquid assets.
  • Construction period is generally 12 months; interest only based off the draw disbursement.
  • Maximum loan to value is 90%. 
  • Minimum loan amounts are $50,000.
  • Draws are based off property inspections by percentage of construction completion.
  • Builders must provide a State of Tennessee license as the general contractor per Tennessee Code Title 62, Chapter 26. 
  • Y-12 FCU prohibits homeowners to be their own contractors. 
  • A survey or plat map must be provided that demonstrates the dimensions and placement of dwelling (house placement). 
  • Member will provide a builder’s risk policy listing Y-12 FCU as lienholder.
  • Property must be held in a fee simple ownership.  Land that has any encumbered liens must be paid in full prior to the first draw.
  • Modification of the permanent financing is concluded once the filed Notice of Completion and visible inspection has been provided. 
  Subject to credit approval.

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