Construction-to-permanent loans: one closing, from foundation to front door

How the two phases work

During construction, the loan works like a line of credit. The bank releases money in draws as work is completed and inspected, and you pay interest only on what's been drawn. When the home is finished and the occupancy certificate is issued, the loan converts automatically into a standard mortgage. No second application, no second appraisal, no second closing.

What the draw schedule looks like

Draws typically follow the build itself. A common five-draw schedule:

• Foundation and site work
• Framing, roof, and windows (dried-in)
• Rough mechanicals: plumbing, electrical, HVAC
• Drywall, cabinets, interior finish
• Final: flooring, fixtures, occupancy certificate

Why the lender matters more on a build

A build has a dozen moments where something needs a decision: a change order, a weather delay, a builder who wants a draw a week early. When the loan lives in a portfolio and the inspector, underwriter, and closer sit in the same building, those decisions happen in a phone call. When the loan is headed for a national servicer, they happen in a queue.

Home State Bank has financed homes across McHenry County for more than a century, and now across the Fox Valley from our Appleton office. We know the builders, the townships, and what a permit in Crystal Lake, Cary, Woodstock, or Grand Chute actually takes.

What to have ready

Come to the first conversation with as much of this as you have:

• Builder contract and detailed cost breakdown
• Plans and specifications
• Lot purchase agreement or deed if you already own the land
• Builder's license, insurance, and references
• Standard income and asset documents