Construction-to-Permanent Financing

C-to-P financing allows lenders to replace interim construction financing the borrower used to construct a new residence with a long-term mortgage that can be delivered to Fannie Mae.

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The new home construction market today supports more than 100,000 newly built homes per year. These homes are usually purchased with financing obtained by the homebuyer using conventional terms.

Fannie Mae supports this new home construction market by offering two types of financing: Single-Close and Two-Closing Transactions.

Together, these products can help lenders grow their business by closing the gap in housing supply in the communities in which they operate.

Single-Close Transactions

Single-close transactions allow lenders to underwrite and close on the construction loan and the permanent financing at the same time using one set of closing documents.

  • Beneficial for those customers who would rather close on both the construction loan and the permanent financing at the same time upfront.
  • Lender is responsible for managing the disbursement of the loan proceeds to the builder, contractor, or other authorized suppliers. The lender may use a third party for this function, though the lender remains responsible for overseeing the third party and ensuring all required steps are fulfilled.
  • Can reduce the cost to the borrower because they are paying for one closing instead of two.

Two-Closing Transactions

Two-closing transactions utilize two separate loan closings with two separate sets of legal documents. The first closing is to obtain the interim construction financing (and may include the purchase of the lot), and the second closing is to obtain the permanent financing upon completion of the improvements.

  • Allows a borrower to choose an interim construction lender and a different lender for the permanent financing.
  • Good option for when the borrower is seeking different terms than what is available at the time the construction loan is made.

Get Started with C-to-P

Forms

Form Title
Multistate Construction Contract (Form 3734): PDF Single-Family - Fannie Mae HomeStyle Model Document
Multistate Construction Loan Agreement (Form 3735): PDF Single-Family - Fannie Mae HomeStyle Model Document
Multistate Riders and Addenda (Form 3737): PDF Single-Family - Fannie Mae Uniform Instrument
Multistate Riders and Addenda (Form 3738): PDF Single-Family - Fannie Mae Uniform Instrument
Form 1004D Appraisal Update and/or Completion Report
Form 3161 Loan Modification Agreement (Providing for Adjustable Interest Rate)
Form 3179 Loan Modification Agreement (Providing for Fixed Interest Rate)
Special Purpose Documents Find model legal documents that have been developed for a special purpose.