1st Florida Lending Corp., a registered Mortgage Lender
Orlando servicing only the State of Florida, offering over
48 loans programs including Conventional Loans, Non-
Conforming Loans, FHA Loans, VA Loans, USDA Loan,
Self-Employed Loans, Bank Statement Loans, No-Doc
Loans, Reverse Mortgage Loans, ITIN Loans, Rental
Investment Loans, to name a few and specializing in
Bank Statement Loans or “stated loans” requiring no Tax
Return verification and much more. * No broker or
lender fees are for FHA,VA, USDA and Conventional
loan types
Main Office: 2151 Consulate Dr. * Suite 8 * Orlando,
FL., 32837 * Telephone * (800)856-7097 * (800) 655-
1345 * (407) 300-2558 * Fax (877) 401-9955
* Disclaimer: All Loan programs, rates and terms can
change without notice and are subject to credit and
underwriting approval. Loan charts highlight min/max
constraints, assumptions & random scenarios only. We will
always work hard to approve your loan but there are no
guarantees of any kind expressed or implied that any loan
we be approved. Licensed in Florida Only. When Banks
Say No ! We Say YES ! ® is a registered trademark owned
by 1st Florida Lending Corp. Florida lender license #
MLD106.
© 2007 - 2023 1st Florida Lending Corp. - All rights reserved
1st Florida Lending
Construction Lending
Thank you for considering a construction loan
from 1st Florida Lending, a trusted Direct
Mortgage Lender with experienced
professionals dedicated to helping you build
the home of your dreams. When you work with
1st Florida Lending, you choose a Lender with
an A+ Rating from the Better Business Bureau
with zero complaints.
The purpose of this webpage is to provide you
with information about construction lending
along with construction products, builder and
project acceptance requirements, and
information about how to obtain draws to pay
for construction. Should you have questioned
this guide does not address, please contact
your Loan Officer, who will be more than happy
to assist you.
Building a home can be a daunting challenge,
but those who have successfully completed a
project will tell you the results are incredibly
rewarding. It is with hope This guide will take
you step-by-step through the process, from
choosing a builder to moving into your new
home.
Construction Lending and
Products - 680 Min Credit
Score Required
One-Time Closing
A one-time construction loan combines
construction financing with the same loan as
the permanent mortgage financing. There is a
single closing transaction before construction
begins where a single set of fees and closing
costs are collected from the Borrower. Once
construction is complete, the loan will convert
to a permanent mortgage, and the Borrower
will begin making a traditional principal and
interest payment to include an escrow
payment for taxes and insurance, if required.
1st Florida Lending offers a variety of loan
options to make it easy for you to select the
product best for you and your build.
Conventional, FHA, and USDA Loans
During the construction phase of these types
of loans, Borrowers pay a monthly interest
payment based on the amount of construction
funds used to-date (construction funds are
accessed through “draws,” explained later
below), along with private mortgage insurance
and an escrow payment for real estate taxes
and insurance, if required.
VA Loans
During the construction phase of VA loans, the
builder pays a monthly interest payment based
on the amount of the construction funds
drawn to-date, along with a payment for real
estate taxes, hazard insurance, or builders risk
insurance.
Conventional One-Time Close - Min 5% Down
Payment
Our Conventional One-Time Close Loan offers
the Borrower a one-time construction
purchase or refinance within conforming loan
limits, reducing fees paid by the Borrower. The
loan allows 10 months for the home to be
completed with a minimum down payment of
5%.
VA One-Time Close - Zero Down Payment
The VA One-Time Close Loan offers the
Borrower a one-time close construction
purchase of a primary purchase up to a $4
million loan limit, reducing the fees paid by the
Borrower. The VA One-Time Close Loan allows
10 months for the home to be completed with
100% financing. You must be an eligible VA
Borrower.
Benefits of Our One-Time Close Construction
Loan Programs
•
Eliminate the need to acquire multiple
loans to finance your dream home
construction.
•
Our one-time closing means one set of
closing costs.
•
Avoid interest rate fluctuations and risks
because we lock and close your loan
before construction starts.
•
Work with our trained Mortgage Bankers
for assistance in picking the right options
for your personal
•
construction loan.
Two-Time Closing
A two-time closing is now available for jumbo
and conforming loan limits. A two-time closing
construction loan involves two separate loans:
•
Construction loan, used only to fund the
construction of the residence and
associated costs (and possibly lot
acquisition) and
•
A permanent loan for the permanent
mortgage financing.
Important: The construction loan closes
before construction begins. Once construction
is complete, the permanent loan will be
processed and closed and the Borrower will
begin making a traditional principal and
interest payment, including an escrow
payment for taxes and insurance, if required.
There are separate closing costs the Borrower
must pay for the construction loan and the
permanent loan.
Two-Time Close Eligibility
Residence
1st Florida Lending Mortgage Group’s Two-
Time Close offers a construction loan option
for a purchase or refinance of a primary or
secondary residence that exceeds the
conforming loan limits for conventional loans
Home Completion
The Two-Time Close allows 10 months for the
home to be completed with a minimum down
payment of:
•
10% for Primary Home
•
20% for Second Home.
Construction Process
There are two loans involved in the
construction process of the Two-Time Close:
•
One is for the construction of the home
and
•
One for the permanent loan that is
established once the home is completed.
Two-Time Close Application
You will apply for both loans simultaneously
and the permanent loan is done as a refinance.
Residence
1st Florida Lending Mortgage Group’s Two-
Time Close offers a construction loan option
for a purchase or refinance of a primary or
secondary residence when the purchase price
of the property exceeds the conforming loan
limits.
Home Completion
The Two-Time Close allows 10 months for the
home to be completed with a minimum down
payment of: 10% for Primary Home or 20% for
Second Home.
Construction Process
There are two loans involved in the
construction process of the Two-Time Close:
•
One is for the construction of the home
and
•
One for the permanent loan that is
established once the home is completed.
Two-Time Close Application
You will apply for both loans simultaneously
and the permanent loan is done as a refinance.
On-Site Underwriting Construction
Project Department
Construction lending consists of providing
financing for the construction of a new
residential structure on property either already
owned by the Borrower or purchased
concurrently with the loan closing.
Underwriting has an on-site Underwriting
Construction Project Department to assist
with the builder acceptance, project
acceptance, and draw administration for your
loan.
Getting Started
To get started, make an appointment with your
Mortgage Banker. The Mortgage Banker will
guide you through the steps to get pre-
qualified.
The Lending Process
The Mortgage Banker will review your credit
and financial information to help you
determine how much you are comfortable
spending on your new home build. 1st Florida
Lending will provide all the information you
need to help you make a well-informed,
confident decision about the home build
process.
Pre-qualification for a construction loan
is based on several factors, including:
1.
Your overall financial situation based on
the initial financial documents you provide
to the 1st Florida Lending
2.
A rough estimate of the construction
costs provided by you, your real estate
agent, or builder.
Once again, except for a few additional pieces
of information, applying for a construction
loan is similar to applying for any other type of
mortgage?
Initial Financial Documentation
During the initial process, your loan officer will
request supporting documentation such as,
but not limited to, tax returns, paystubs, and
bank statements.
Loan Estimate
Once the application is submitted, you will
receive an initial Loan Estimate. The Loan
Estimate provides you with an estimated
interest rate, monthly payments, taxes and
insurance, and cash required at closing.
Rate Lock
This means you and 1st Florida Lending have a
written agreement on your loan’s interest rate
and discount points. It protects you from an
increase in rates between now and your
closing. If rates rise, we won’t assign you a
higher rate. If rates dip, you won’t get a lower
rate.
Loan Approval
Once 1st Florida Lending has received all the
necessary documentation/information, an
impartial underwriter will review your loan
application, income and asset documentation,
credit report, property appraisal, etc., for
approval of the loan itself. The underwriter
ensures the criteria for approval are met for
the loan program under which your application
was received. Sometimes the underwriter will
request additional documentation to aid in
their
decision making.
We realize the anxiety inherent in this part of
the approval process, and we will make every
effort to make a final decision as quickly as
possible. The end result of the loan approval
process, we all hope, will be an approval notice
outlining the conditions that must be met
either prior to or at loan closing. Reach out to
your Loan Officer to clarify anything you do
not understand or answer any questions.
----------
Reservation Process
The reservation process consists of a
preliminary reservation of funds that are
anticipated for construction and a final
approval of the reservation of funds. This is
not to be confused with the rate lock. Once
you have signed the appropriate disclosures,
we can apply for a preliminary reservation of
funds, which expires 30 days from the date of
application. If the loan is not approved within
30 days, the preliminary reservation will be
cancelled. If the loan is approved, you will
receive a final reservation of funds.
Builder Acceptance
Selecting the right builder is a key to success
in the construction of your new home. As the
customer to the builder, it is your responsibility
to exercise due diligence in choosing a builder.
1st Florida Lending cannot recommend any
builder or assist with builder selection but can
make recommendations for selecting a
reputable builder:
Get recommendations from family,
friends, and neighbors.
•
Talk to your real estate agent.
•
Research social media and Better Business
Bureau complaints and ranks.
•
Ask a lot of questions about their
experience with this type of project.
•
Request at least three estimates and
timeframes for completion and compare.
•
Ask to see photos of completed projects.
•
Ensure the builder is licensed, insured, and
bonded.
•
Ask for referrals from the builder.
•
Ask about their quality control process for
subcontractors.
•
Use someone who is professional and
answers all the questions you ask.
After a licensed and insured builder is selected,
submit the following information to 1st Florida
Lending to start the builder acceptance process.
Builder Information Needed
•
Builder Name and/or Company Name
•
Builder Address
•
Contact Person and Contact Information
The underwriting Construction Project
Department will contact the builder to obtain
additional documentation. 1st Florida Lending
will do our due diligence and request and
research the following.
Builder Documentation Needed for
Acceptance
1.
Builder Acceptance Package
2.
Builder license
3.
VA Builder ID for VA only
4.
W-9 form
5.
Written overview of company experience
6.
Two closed examples of recent build
times less than 12 months with the build
price range
7.
(Certificate of Occupancy and seller CD)
8.
All construction agreements and/or
disclosures signed
9.
Liability insurance policy with a minimum
of $1 million and must list certificate
listing underwriting as additionally
insured.
10.
Builder’s risk insurance to include
additional coverage for flood insurance (if
applicable)
11.
Worker’s compensation policy with the
coverage listed and the certificate listing
underwriting.
12.
Statement of Exemption from worker’s
compensation.
IMPORTANT
Our acceptance of a builder is not an
endorsement of that builder, but rather an
acknowledgement at the time of our review
they met our standards for participation in our
construction programs in terms of licensing,
insurance coverage, timely payments to
subcontractors and suppliers, etc.
Project Acceptance
Project acceptance is based on the loan
product and allowable features of the
construction loan. Once the builder
acceptance is completed, you and your builder
will need to agree and execute a draw
schedule for the construction budget. 1st
Florida Lending will order an appraisal to get
an estimate of what the property value will be
once the construction is complete based on
plans and specifications provided by your
builder. Appraisals are conducted by highly
qualified, licensed appraisers who are familiar
with construction financing in your area and
are a
requirement of the loan approval.
Construction Kickoff Call
The Underwriting Construction Project
Department will coordinate the kickoff call
prior to the loan closing with you, your builder,
1st Florida Lending and underwriting review
the construction lending process and all of the
steps necessary to ensure a smooth
construction project.
Loan Closing
Loan closing is the point at which the final
loan documents are signed. This appointment
often takes place at a title or escrow company
but can also take place elsewhere. You, the
Borrower(s), will attend closing with a
settlement agent. Any cash down you bring to
closing will be used to acquire or pay off the
lot or may be disbursed to the builder as a
draw at closing. Any excess down payment
funds not needed at closing will be held in an
escrow account and disbursed as work is
completed.
----
Lot Loan Purchased Separately
If you purchased the lot separately and not
from the builder as part of the construction
transaction, and if you obtained lot financing
when you purchased the lot, we will pay off
any outstanding amount at closing. The
disbursement of funds at closing for this
purpose is not considered a draw. Note: There
may be other funds disbursed at closing for
certain construction costs that will be
considered a draw.
Draws at Closing
A builder may wish to request a draw at loan
closing to provide funds for initial materials or
for special order items that require payment at
the time the order is placed (e.g., custom
cabinetry). It can also be used to reimburse
you for items you paid for in advance or
deposits that may have been needed to start
the project.
Accessing the Funds
A draw at closing is the only opportunity to
access construction funds for 10 business
days following the loan closing. A limit of 10%
of the budget or $50,000, whichever is less, is
placed on this draw. After the loan closes, you
are ready to begin construction! As work
begins, 1st Florida Lending will help you to
understand how to request funds to pay for
completed work.
Understanding Construction Draws
Construction draws are periodic advances
taken against the credit line for the builder to
pay for materials and subcontractors as work
on the house is completed. Once your loan has
closed and construction has commenced, you
will need to submit draw requests to access
loan funds as the work progresses. The
underwriting Underwriting Construction
Project Department will handle the
transaction. Here is a look at the process for a
typical draw request:
1. Draw Request:
A Construction Draw Request Form: All draws,
including a draw at closing, require the
completion of a Construction Draw Request
Form. A Draw Request Form is used by the
builder to request funds from the construction
account for completed work. The Draw
Request Form must be executed by the builder
and Borrower(s) before any funds can be
disbursed. This form must list the line items of
the budget from which the funds are to be
drawn. The underwriting Construction Project
Department will send an email
acknowledgement within 24 hours of the draw
request. Your Loan Officer can call the
Underwriting Construction Project Department
if the builder does not receive this notice.
2. Draw Inspections:
With every draw request, the Underwriting
Construction Project Department will order a
site inspection. The inspection is provided to
1st Florida Lending to confirm the work
completed by the builder. The Underwriting
Construction Project Department will also
confirm with the title company no mechanic
liens have been filed by the builder on the
property.
3. Disbursement of Draw Funds
Upon receipt of clear site inspection and title
update, funds are wired directly to the builder.
4. Funding Notification
The Underwriting Construction Project
Department will send a funding notification
after the draw is funded. In most cases,
the designated party will have funds within 7-
10 business days of submitting a complete
draw request.
Additional Requirements
All Construction Loans
•
Required permits. Permits are required
prior to closing.
•
Regular updates. Work must begin within
30 days of the loan closing and may not
stop for a period greater
•
than 30 consecutive days.
•
Change orders. If the original scope of
work needs to be changed, a written
Change Request Order form must be
submitted to 1st Florida Lending for
approval prior to the work being
performed. Significant changes to work
may impact value and loan terms.
•
Contingency funds. Contingency funds will
be used for any change orders and/or
overages.
•
Monthly payments. Monthly payments
must be current at the time of draw
requests.
Additional Requirements Final Draw
•
Final inspection and/or appraisal update
showing the project is 100% complete.
•
Final inspection and/or appraisal update
must show the market value has not
changed.
•
Clear title update.
•
Certificate of Occupancy.
Mechanic Liens
In certain states a subcontractor or supplier is
required to give notice to the property owner,
builder, and/or mechanic lien agent of their
intent to file a lien; this is one way in which a
subcontractor or supplier can advise a
property owner they are working on their
project. The subcontractor and supplier are not
required to notify 1st Florida Lending.
Because of the possibility that these liens can
affect our primary lien position and/or the
completion of your project, it is important that
all notices received will be forwarded to our
Underwriting Construction Project Department
immediately.
Builder Disputes/Changes
It is certainly not unheard of for homeowners
and builders to find themselves in
disagreement at times during a construction
project. There can be misunderstandings
about the scope of work that the builder is to
perform, differences of opinion about the
quality of work, complaints about the time it
takes to complete a job, and many other
potential disputes. As your construction
lender, our role is to provide financing for your
project and to ensure the builder meets our
standards for licensing, insurance coverage,
etc. We are not a project manager, nor are we
able to act as a mediator or referee in disputes
between you and your builders.
Builder Changes
Builder changes on a new construction loan
should only be required in exceptionally rare
circumstances and are subject to 1st Florida
Lending and underwritings approval. Please
contact your loan officer for more information
or by email at support@1floridalending.com
Extension Request
In the event construction is not completed by
the deadline, you and your builder may request
a formal extension for exigent circumstances
or for reasons beyond your control. An
extension request 45 days prior to the
completion date is required.
•
Two 30-day extensions are allowed.
•
You must complete the paperwork and
return it to us with the reason for delay.
•
An extension fee will be required.
•
No refund is provided if the work is
completed sooner.
•
No additional draws will be processed if
your loan has exceeded the predetermined
construction period until we have received
the extension paperwork and appropriate
extension fee.
•
The total construction time including
extensions must not exceed the allowable
timeframe for the construction loan
product.
•
Extension approvals are the sole discretion
of 1st Florida Lending. Any extension
request over the 12-month period will
require additional fees.
End of Construction and Permanent Financing
One-Time Close
At the end of the construction phase, final
draw funds are disbursed and any
construction funds remaining, e.g., unused
contingency funds, will be applied to the
outstanding principal of the loan. One-Time
Close construction loans will convert to the
fully amortized permanent phase and
payments will include both principal and
interest and taxes and insurance, if applicable.
When work is finally completed you will be
required to sign loan modification documents
to change the beginning date of the permanent
phase of your loan and the maturity date.
Please note you will be required to pay any
taxes, homeowner insurance, flood insurance
(if applicable), escrows, and fees at the time
of modification.
Two-Time Close
At the end of the construction phase, final
draw funds are disbursed and any
construction funds remaining, e.g., unused
contingency funds, will be applied to the
payoff balance of the loan.
For Two-Time Close construction loans, the
permanent loan will have to process and close
to become fully amortized, and at that point
payments will include both principal and
interest and taxes and insurance, if applicable.
The permanent loan payments will be based
on the term and interest rate you selected with
the applicable program. Credit will be repulled,
and updated income, assets, employment
documentation, etc. will be required within 60
days of the construction being completed.
Please note you will be required to pay any
taxes, homeowner insurance, flood Insurance
(if applicable), escrows, and fees at the time of
closing, as well as any closing fees associated
with the permanent loan. After conversion, you
will pay on the loan each month as you would
any other mortgage or refinance, when
appropriate.
Glossary of Terms
The following section is a glossary of terms
used in construction lending. Sometimes the
unique terminology used by builders, lenders,
and service providers can seem like another
language. We hope this glossary will provide
some clarity to help you navigate the
construction lending process.
Change Order An official recognition of a
change to the construction plans and
specifications, and to the project budget.
Changes are additive only, meaning that
everything included in the original plans and
specifications will be completed as planned,
but there will now be additional or new work
added that was not originally contemplated
and can be made without requiring a new
appraisal. Subject to approval.
Draw Request and Form The Draw Request
and Form are used to request funds from the
construction loan funds. Subject to approval.
Line Item A line item is a part of the
construction budget that shows the amount
budgeted to complete a particular component
of the home.
Title Insurance and Mechanics Lien Coverage
Title insurance for loans issued with
Mechanics Lien Coverage is required for all
construction loans. Mechanics Liens occur
when the builder fails to pay their
subcontractors. The construction project must
be insured in case this occurs.
Permits An authorization from the local
building authority to begin work on a
construction project.
Request for Change Order A form used to
move funds from one line item to another in
the construction budget.
Site Inspection On-site review of the progress
of the construction project by an appraiser to
determine whether the work or materials
requested on the draw form.