You’re planning those big dreams and ready to build your new home in Arizona. An Arizona construction loan is a special kind of loan that gives you the money you need to pay for the building costs.
Instead of waiting until the house is finished and then getting a regular mortgage, a construction loan provides the funds upfront. It’s a short-term loan that covers the construction period, and once the house is done, it usually converts into a standard mortgage.
Two Types of Construction Loans
A one-time close loan combines the construction loan and the permanent mortgage into a single loan with one application, one closing, and one set of closing costs, offering a streamlined and simpler process with a fixed interest rate from the start.
In contrast, a two-time close loan involves two separate loans—one for construction and one for the permanent mortgage—requiring two applications, two closings, and two sets of closing costs, providing more flexibility to adjust terms and potentially secure better mortgage rates but with more complexity and higher overall costs for an Arizona Construction Loan.
We Prefer the One-Time Close Loan
At Mohave Mortgage, not only do we specialize in Arizona Construction Loans, we also specialize in the One-Time loan product AND we strongly advise it vs. the Two-Time close.
Instead of applying for a construction loan first and then a mortgage later, you just go through the process once. Ultimately, this means fewer headaches, less paperwork, and only one set of closing costs to worry about!
How Can You Qualify
To get an Arizona construction loan or a one-time close loan, here are the main things you need to focus on:
- Good Credit Score: Lenders want to see that you have a good track record with borrowing money, so having a solid credit score (usually 680 or higher) is important.
- Down Payment: You’ll need to put down some money upfront, typically around 20% of the total cost of the project. This shows the lender you’re serious and have some skin in the game.
- Income and Employment: Lenders are looking for a stable job and enough income to handle the loan payments. They’ll ask for proof, like pay stubs or tax returns pending on your individual scenario.
- Debt-to-Income Ratio: This is a measurement of how much of your monthly income goes toward paying debts. They prefer it if you’re not spending more than 45% of your income on debt.
- Construction Plan and Builder Approval: You’ll need a detailed plan for your construction project and a reputable builder to carry it out. The lender will review and approve both before they give you the loan.
- Savings and Reserves: Having extra savings can be a big plus. It shows lenders that you have a cushion to cover any unexpected costs during the construction.
Ready? Let’s Get Started!
Arizona construction loans help you finance building a new home, and one-time close loans make the process easier by wrapping everything into one package. To qualify, you need good credit, a solid financial situation, and a well-thought-out construction plan.
Completing the application, documents required, understanding the approval processes and timelines are so important. Mohave Mortgage is here with you every step of the way for Arizona construction loans. Contact us today!
