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The Construction-to-Permanent Loan

A construction-to-permanent loan finances the land, the build, and the mortgage that follows through one closing. During construction, you pay interest on funds already disbursed. On VA loans, that interest is paid from an interest reserve, so the veteran makes no payments during the build. After the home is complete and Luminate gives final approval, the loan can move into its permanent phase.

One closing

covers the land purchase, construction, and permanent financing

Up to 12 months

initial construction term, with a possible paid extension

Interest only

during construction, based on the funds already disbursed. VA borrowers make no payments during the build

The Basics

What is a construction-to-permanent loan?

A construction-to-permanent loan, or C2P, uses one closing for two phases. The construction phase can finance the land and the build. During construction, you pay interest on the amount already disbursed. On VA loans, that interest is paid from an interest reserve, so the veteran makes no payments during the build. Once the home is complete and the final requirements are met, the loan is modified into the permanent mortgage.

A stand-alone construction loan covers only the build, so you must arrange permanent financing afterward. A C2P approves the construction and permanent financing together, which removes the planned second closing.

The construction and permanent rate terms are established at closing under Luminate's current pricing. A free float-down may be available when the loan moves into the permanent phase if market rates are lower, subject to the program rules.

Four Luminate Programs

Which C2P program fits your build?

Luminate offers FHA, VA, conventional, and portfolio C2P paths. VA C2P is a specialized option that can provide $0-down construction financing for eligible veterans, though few lenders offer it. The right fit depends on your credit, loan size, property, occupancy, and underwriting result.

Luminate C2P program requirements at a glance

RequirementFHAVAConventionalPortfolio
Minimum mid score620620680–700, based on loan limit700 conforming; 720 non-conforming
Maximum LTV96.5%Up to 100% LTV ($0 down)95% primary; 75% second home80–90% based on loan size and occupancy
Loan sizeCurrent FHA loan limitUp to the current conforming loan limitUp to current agency limitsAbove current agency limits; published LTV tiers vary by loan size
Cash reservesPer underwriting findingsPer underwriting findingsPer underwriting findingsSix months of PITI for non-conforming loans

Four Key Advantages

What are the advantages of a C2P loan?

Building is the one purchase where the financing shapes the project itself. Here is what the one-time-close structure actually buys you.

  1. Rate terms are set at closing

    The construction note rate and permanent mortgage rate are established under Luminate's pricing at closing. If market rates are lower when the home is complete, a free float-down may be available, subject to program rules.

  2. One closing for both phases

    The construction financing and permanent mortgage are approved together. Conversion is not automatic: construction must be complete, the builder fully paid, final approval issued, and the loan in good standing.

  3. Interest only while you build, or none for VA

    During construction, you are billed interest only on the amount already disbursed, including any land payoff. On VA C2P loans, that interest is paid from an interest reserve, so the veteran makes no payments during the build.

  4. Buy the lot or bring one you own

    You must own or purchase the lot at the C2P closing. If you already own it, the transaction is treated as a limited cash-out refinance, and the usable equity depends on the program, appraisal, and how long you have owned the land.

Eligibility

What it takes to build one

One loan covers the build and the mortgage that follows through one closing. Qualifying also accounts for the plans, builder, construction budget, and program-specific credit and equity requirements.

How it works

One closing, then the construction phase

You close before construction starts. During the build, you pay interest on the amount already disbursed. On VA loans, that interest is paid from an interest reserve, so the veteran makes no payments during the build. When construction is complete, the builder is fully paid, final approval is issued, and the loan is in good standing, you sign a modification that moves the loan into its permanent phase.

  • 1Closing for both phases
  • Up to 12 mo.Initial build window
  • Up to 2Draws allowed each month

If the build misses its completion date, one 90-day extension may be available for a borrower-paid fee. If completion exceeds 18 months from closing, the loan may require requalification and refinancing.

The property & the builder

The home and builder are approved before closing

Luminate needs complete plans and specifications, a fixed-cost construction contract, an eligible registered builder, and builder's risk insurance before closing. A builder cannot act as the general contractor for the construction of their own home.

  • Complete plans, specifications, cost breakdown, and fixed-cost contract

  • Builder registration and a signed builder sales contract

  • Builder's risk insurance, including flood coverage when required

Money & credit

Credit and equity depend on the program

Luminate's minimum mid score starts at 620 for FHA and VA, 680–700 for conventional, and 700–720 for portfolio loans. Maximum LTV ranges from 80% to 100%, depending on the program, loan size, occupancy, and underwriting result.

FHA and VA minimum mid score
620
Conventional minimum mid score
680–700
Portfolio minimum mid score
700–720

Loan limits and pricing change. Ask us to confirm the current program fit for your build before relying on these figures.

Building is the one loan where the team matters as much as the numbers. Bring your plans; we'll walk the rest together.

Talk through your build

Before You Break Ground

Four things to plan for before construction

Plan changes come from your pocket unless the loan includes available contingency funds. The construction loan amount cannot be increased after closing under the standard draw process.

The appraisal is completed from the plans and specifications, subject to completion. A final inspection and certificate of occupancy are generally required before the last builder payment.

Keep the loan in good standing throughout the build. Credit documents may need to be refreshed before modification, and a build extending beyond 18 months may require requalification and refinancing.

Each draw requires the builder's request, your written approval, and an inspection with photos. The inspection should be completed within three days, and Luminate allows up to two draws per calendar month.

Questions

Construction loan questions we hear most

A construction-to-permanent loan, or C2P, finances construction and the permanent mortgage through one closing. It can also finance the land purchase when the lot is bought at closing.

During construction, you pay interest on the amount already disbursed. On VA loans, that interest is paid from an interest reserve, so the veteran makes no payments during the build. Once the home and final loan requirements are complete, you sign a modification that moves the loan into its permanent phase.

Thinking about building?

Bring your plans, your lot, or just the idea. Jimmy's team will walk you through what the build can carry and which program fits — no pressure, no obligation.

Schedule a ConsultationCall (480) 800-8387
Jimmy Vercellino, home loan advisor

Why Build With Us

Your construction loan Phoenix lender

A construction loan is an ongoing process, not just a closing. Your builder works with Luminate through draw requests, inspections, documentation, and final approval while the home is built.

Luminate offers FHA, VA, conventional, and portfolio C2P paths. VA C2P is a specialized program that few lenders offer, and eligible veterans may finance up to 100% of the project with $0 down. Jimmy's team can confirm whether it fits your service eligibility, credit, land, budget, and build plan.

Start Your ApplicationCall (480) 800-8387
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