Residential Construction Loans
Today�s modern day construction loan is usually a one-time close, one set of loan fees construction to perm or permanent loan. The construction loan includes the construction loan period and long term financing to build a dream home in California.
Construction Lending Features:
- Lot Loans
- Construction
- Demo & Rebuild
- Remodel
- Rehabilitation
Lot loans up to $1,500,000
Construction financing to $3,000,000 standard and up to $8,000,000 for High Net Worth individuals.
Lock permanent loan up-front for up to 24 months on ARM and Fixed loan products.
Construction Loan Highlights
Construction Loan Overview
Single close construction to permanent financing.
Purpose of Construction Loans
Purchase, finance and cash-out refinance
Products/Pricing
Construction phase: Prime based, interest only based on the amount disbursed. Permanent phase: Lock First allows the permanent financing to be locked prior to beginning construction. Lock After floats the permanent financing until after construction is completed. See daily rate sheet for pricing.
Processes
Modified/Standard (Full Doc), LoanQuick, Asset Based Stated Income
Occupancy
Primary residence, second home, investment (rental) property.
Property Type
New construction, remodel or rehabilitation of: 1 unit, PUDs Attached and detached dwellings (i.e. PUDs, town homes) are permitted for both ground up and remodeling. 2 Units. Pre-starts (homes already under construction) are permitted provided there is no delinquency on the existing construction financing.
Not permitted: Condos, coops , development projects and spec homes commercial, mixed use, apartments.
Construction Loan Terms
Construction phase (months) 4, 6, 9, 12, 15, 18, 21, 24
Interest Rates
Required Standard. Can be waived under certain circumstances.
Contingency Reserves
Required Standard. 5% on Ground Up and Non-Structural Rehabs. 10% on remodels. Can be waived under certain circumstances.
Owner/Builder
By exception only. Owner/Builder requires a licensed contractor as a project manager. Specific requirements apply throughout the construction phase regarding the Project Manager's responsibilities.
Fees
Commitment fee: Lot Loans - $550; CTP Loans - $700. Draw administration fee: 25 bps, with a minimum of $995.
Draw Allowance:
Construction term: <=6 mos.: 5draws, 9mos.: 9 draws, 12 to 15 mos.: 14 draws, >=18mos.: 18 draws. Additional draws can be purchased for $250/each
Appraisals
For loan amounts greater than $1,000,000, 2 appraisals are required. Appraiser must be on the lender approved list.
Qualifying Rates
Lock first: qualify at Note Rate for: Fixed Rates, 7/1, 5/1, & 3/1, 2/1 and 1/1
Lock After: Qualify at Note lock in rate (using par pricing) for: Fixed Rates, 7/1, 5/1, & 3/1, 2/1 and 1/1.
Qualify at Fully indexed + 2% for: 1 Mo, 6 Mo, and 1/1 LIBOR
ARM Caps
5/2/5 for: 1/1, 2/1, 3/1, 5/1, 7/1, T-Bill
2/2/6 for: 1 yr, 3/1 T-Bill
Special Construction Reserves
Transition Ratio
6 months PITI - conditions apply
Waive Financed Interest Reserve
Valuation and Loan Amount Calculation
The loan amount will be calculated using the LESSER of: 1) total acquisition costs multiplied by LTC matrix (80% LTC to $1M; 75% LTC to $1.5MM, OR 2) appraised value multiplied by LTV.
Pre-Closing Asset Accounting
In addition to brokerage accounts, retirement accounts, bank account balances, etc., recent (within 24 mos.) payment toward lot purchase, and prepaid expenses for hard and soft costs related to the project can be considered as pre-closing assets (if properly documented).
Early Delivery/Prepayment Penalty
The loan is subject to a 1% penalty is any of the following occurs: 1) Borrower requests to roll to permanent phase prior to the end of the committed construction term; 2) Loan fails to roll to permanent phase; 3) Once rolled to the permanent phase, if the permanent loan is paid off prior to 4 months and 4 monthly payments.
Full Doc LTV Matrix
Modified/Standard (Full Document)
Purchase and Rate/Term Finance
| Primary | LTV | Loan Amount | FICO |
| | 80% | $1,000,000 | 680 |
| | 80% | $1,000,000 | 680 |
| | 75% | $1,500,000 | 680 |
| | 70% | $2,000,000, $3,000,000 and above 60% | 700 |
| Second | | | |
| | 85% | $1,000,000 | 680 |
| | 80% | $1,000,000 | 680 |
| | 70% | $2,000,000 | 680 |
| | 60% | $3,000,000 | 700 |
Cash Out Refinancing
| Primary | LTV | Loan Amount | Max Cash Out | FICO |
| | 80% | $1,000,000 | $250,000 | 700 |
| | 80% | $1,000,000 | $500,000 | 700 |
| | 70% | $1,500,000 | $700,000 | 680 |
| | 60% | $2,000,000 | $700,000 | 680 |
| | 60% | $3,000,000 | $700,000 | 680 |
LoanQuick
Overview
LoanQuick is a process of preferred documentation for loans that meet debt ratio requirements and minimum FICO score.
Credit Score and Qualifying Ratio Requirements
| Conforming | FICO | Max Ratio |
| Salaried | >=680 | 45.00% |
| | 680-719 | 45.00% |
| Self-Employed | >=680 | 45.00% |
| | 680-800 | 45.00% |
| |
| Non-Conforming | FICO | Max Ratio |
| Salaried and | >=680 | 45.00% |
| Self-Employed | 680-800 | 45.00% |
Preferred Documentation Features
Salaried (two year work history required)
1 YTD pay stub (most recent computer generated), 1 W-2 Form (for most recent year)
Self-Employed (Borrower owned for 2 years minimum)
1 year 1040 (pages 1 & 2 only of most recent year), Sched. A required for commissioned income.
Not Required: Business Returns, K-1s, Balance Sheet, P&L.
Bonus/Overtime
Same as Salaried. Average of YTD &w-2
Commission Income
If commission income is <25% of total, use salaried doc.
If commission income is >=25% of total us Self-Employed documentation.
Other Income Sources
Assets
Purchase: 1 month bank statement. Refinance: Not required
Reserves
Purchase: Two months PITI. Refinance: None. Subject to additional construction reserves requirements (i.e. Transitional, Contingency & Interest Reserves)
Important Documentation Requirement
Signed 4506-T required
LTV/Loan Amount Matrix
Use Modified/Standard (Full Document) LTV matrix (Cash-out not allowed). FICO requirements differ than Standard/Modified process type.
High Net Worth Program
Overview
A Full Document initiative designed to offer expanded loan amount and LTV/CLTV parameters on Non-Conforming loan amounts available through Mortgage to High net-worth clients who have $500,000 or more in investable post-close assets. Real estate, restricted stock, loan proceeds, stock options, and personal property will not be counted as part of the $500,000 or more in investable post close assets. Investable assets are defined as the face value of deposit accounts, pledged PAM account assets, unrestricted stocks, bonds, and retirement accounts held by the individual who is personally liable on the loan. Assets held in a revocable trust may be used provided the trust document states that the borrower has power the revoke the trust. The assets held in trust must be of the investable quality stated above.
Total Debt Ratio
<=45%
Assets
Two (2) most recent consecutive months' statements and or other documents are required to verify a minimum of $500,000 in investable post-close assets.
LTV/Loan Amount Matrix
Purchase and Rate/Term Refinance
| Primary | LTV | Loan Amount | FICO |
| | 80% | $1,000,000 | 680 |
| | 80% | $1,000,000 | 680 |
| | 70% | $2,000,000 | 680 |
| | 65% | $3,500,000 | 720 |
| | 60% | $5,000,000 | 720 |
| | 50% | $8,000,000 | 720 |
| Second | | | |
| | 85% | $500,000 | 680 |
| | 80% | $1,000,000 | 680 |
| | 75% | $2,000,000 | 680 |
| | 70% | $3,000,000 | 720 |
| | 65% | $4,000,000 | 720 |
| | 50% | $5,000,000 | 720 |
Cash Out Refinance
| Primary | LTV | Loan Amount | FICO |
| 80% | $1,000,000 | 680 |
| 80% | $1,500,000 | 720 |
| 75% | $2,500,000 | 720 |
| 65% | $4,000,000 | 720 |
| 50% | $5,000,000 | 720 |
| Second | | | |
| 80% | $800,000 | 680 |
| 75% | $1,500,000 | 720 |
| 70% | $2,000,000 | 720 |
| 65% | $3,000,000 | 720 |
| 60% | $4,000,000 | 720 |
| 50% | $5,000,000 | 720 |
Conditions, Restrictions, and Other Requirements:
Asset Based Stated Income
Overview
The Asset Based Stated Income Program (ABIP) is designed to utilize verified assets to support the income stated on application. Income stated on this application must appear reasonable for the applicant to be considered. Stated Income Checklist required.
Total Debt Ratios
Fixed 38%; Arm 40%
Pre-Closing Liquid Assets
Pre-closing assets = to 6 mos. Stated Income. 100% of retirement and stock accounts can be utilized. 3 months bank statements or other verification required. (See reverse for more information)
Reserves
6 months PITI (plus any other construction specific reserve requirements i.e. Transitional Ratios, Contingency Reserves, Interest Reserves, etc.)
Credit Scores
Fixed Rate (Purchase and Rate & Term):
- For a LTV <=75%, the minimum FICO score is 700
- For a LTV >75%, the minimum FICO score is 700
- For Loan amounts over $1.5MM, min. FICO score is 720
ARM (Purchase and Rate & Term):
- Conforming Loan Amounts:
- For a LTV <=80%, the minimum FICO score is 700
- For a LTV >80%, the minimum FICO score is 700
- Non-Conforming Loan Amounts:
- For LTVs, the minimum FICO score is 700
- For loan amounts over $1.5mm, min. FICO score is 720
Fixed Rate and ARM (Cash Out Refinance):
- The minimum FICO score is 700.
Important Documentation Requirements
- Signed 4506-T required
- Signed "Borrower(s) Acknowledgement of Stated Income Amount"
LTV/Loan Amount Matrix
Purchase and Rate/Term Refinance
| Primary | LTV | Loan Amount | |
| 80% | $1,000,000 | |
| 80% | $1,000,000 | |
| 75% | $1,500,000 | ARMS |
| 65% | $3,000,000 | ARMS |
| Second | | | |
| 85% | $1,000,000 | |
| 80% | $1,000,000 | |
| 70% | $1,500,000 | |
| 65% | $3,000,000 | |
Cash Out Refinance
| Primary | LTV | Loan Amount | Max Cash Out |
| 80% | $1,000,000 | $500,000 |
| 80% | $500,000 | $1,000,000 |
| 75% | $1,000,000 | $1,000,000 |
| 65% | $2,000,000 | $3,000,000 |
Coverage
We provide the best construction loans in all the cities in California including the cities of Los Angeles, San Francisco, San Diego, Manhattan Beach, Los Gatos, Mill Valley, Burlingame, Calabasas, Newport Beach, Cupertino, Rancho Palos Verdes, San Carlos, and Danville.
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California Golden State Construction Loans
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