Construction loans finance the construction of a dwelling on a residential property. Encompass supports construction-only loan transactions and construction-to-permanent loan transactions (with blended and separate disclosures). The following sections describe the types of construction loans Encompass supports, the characteristics of these types of loans, and the workflow for each of the supported loan types.
Construction Loans Supported
Encompass supports the following types of construction loans:
- Construction-Only – A construction-only loan finances the initial construction of a dwelling on residential property. The loan is temporary financing that covers the construction phase only. When initial construction of the dwelling is complete, the borrower obtains permanent financing from the same lender or a different lender (take-out lender). Encompass supports fixed-rate and ARM construction-only loans.
-
Construction-to-Permanent Transactions with Blended Disclosures – A construction-to-permanent loan (also known as a C2P loan) is a single transaction that finances the initial construction of a dwelling on residential property and then converts to a permanent loan when the construction phase is complete. With blended disclosures (also known as combined disclosures), each disclosure package contains combined terms for both the construction and permanent phases in a single blended disclosure form, specifically:
-
One blended Loan Estimate provided for both the construction and permanent loan terms.
-
One blended Closing Disclosure provided for both the construction and permanent loan terms.
-
Construction171 – Download PDF
