Whether this is your first home, a vacation home or a second home, we have the right construction loan for you.

Building your new home can be a rewarding and enjoyable experience provided you are properly prepared for the task at hand.  Our experienced new construction loan specialists will guide you through the entire construction process from pre-qualification to closing.

Frequently Asked Questions

What is a construction-permanent mortgage?

A construction-permanent mortgage combines the features of a construction loan, a short-term loan for financing the cost of construction, and the traditional long-term permanent residential mortgage.  There is one closing, which occurs prior to the start of construction.  This program eliminates the need for two closings and saves the borrower the costs involved in the refinance process.

What is Maximum Loan-To-Value?

As a general rule, we will allow a maximum loan to value will be based on the lesser of the borrower’s total acquisition cost (land and construction contract) or the original appraised value (defined as the estimate of value based on plans and specifications at the time of application).

What is the maximum amount I can borrow?

The maximum amount of money that can be borrowed will be determined by several factors; the borrower’s income and credit, the appraised value of the home and the loan program that is applied for.  A conventional loan will typically offer the best interest rate, while governmental programs such as the FHA will finance a greater percentage of the total project costs.

Do borrowers have to pay interest during construction?

Yes.  Borrowers will pay interest from the date of the Note on the principal amount that has been advanced, computed on a daily basis, throughout the construction period.  The interest rate will be disclosed at loan application.

Do borrowers have to pay taxes during construction?

Yes.  Borrowers will establish a tax account based on the projected assessment of the property.  Any taxes and insurance due during the construction period will be paid directly by the borrower.

Will I be able to get financing for the land?

Yes. We can provide financing to purchase the land that will not exceed 80% of the lower of the sales price or appraised value of the land.  If the land draw is taken, then the balance of the construction loan amount is spread over the standard draw percentages.

We then finance the remaining balance provided the seller will subordinate their lien position to us.  The balance due on the land will be provided in the second draw disbursement upon satisfactory completion of the required work.

If the land has public water supply, we must be provided with proof from the local municipality that public water is available.  If there is a private water supply, a well must be installed prior to the second draw.  In addition, a water flow test (or well log) must be submitted indicating an adequate water flow.

What is the Maximum Construction Period?

The maximum construction period is seven (7) months including of the month in which the loan closes.

What is the Rate Lock Period?

The maximum rate lock on the permanent mortgage interest rate is 240 days.  Loans may not be locked until within 48 hours prior to closing.

When will I begin making monthly payments?

The borrower will begin making fully amortizing monthly payments (principal and interest) effective the first day of the second month following the month in which the construction period ends.

Can I build the house myself?

No, First Niagara Mortgage requires a general contractor for all work.

What happens when construction is complete?

The borrower obtains a certificate of occupancy and forwards it to First Niagara Mortgage.  The title is updated and an appraiser makes a final inspection of the property.  The final disbursement is made and the construction loan becomes the permanent mortgage.