One Time Close
What is a One Time Close (OTC) loan?
A One Time Close (OTC) Construction-to-Permanent loan provides you with construction and permanent financing in a single transaction.
How may I use an OTC loan?
With the OTC loan, you may purchase a lot, or refinance one you already own, AND build your new home. You may also use the OTC to purchase or refinance an existing home to which you will be making significant repairs, upgrades, or remodeling.
What's in it for the Homeowner?
As a combined construction and permanent loan, the OTC can save you time, money, and aggravation because:
- You only need to qualify for the loan once, pay loan fees and closing costs only once, and sign loan closing documents only once.
- Your loan amount will be based on the total cost of your project, including land, construction, closing, and interest costs. This structure helps to increase the potential maximum loan amount.
- The OTC loan amount includes a reserve for your monthly interest payments, giving you peace of mind that your payments will be met. You also won't have to make two housing payments while your new home is under construction, saving you much-needed cash flow.
- The OTC loan amount also includes a 5% contingency reserve in case you run into unforeseen cost overruns. This reserve can also protect your cash flow during construction.
- Protection against interest rate increases during construction.
- You have up to 12 months to complete the construction of the home
- Permanent financing has competitive rate for 15-year, 30-year or 3/1 Treasury ARM products.
- The owner's down payment can be as low as 5% for a primary residence (95% LTV)
What are the requirements for the OTC Loan Program?
- Minimum 620 standard credit score as defined by lender.
- Standard ratios are 33/38, will consider back-end ratios to maximum of 45%.
- Full and Alternate documentation
- Liquidity - two (2) months PITI liquidity. (Can be in various forms: 401K, stocks, investment accounts, bank accounts, etc.)
- Approval of: Home Plans (engineered plans if required), specifications, and Loan Budget prior to closing.
- Building Department permit approval required prior to closing.
- Interest reserve and contingency funds must be included in the Loan Budget.
- Construction must be completed in 12 months or less.
* Zephyr Homes, LLC is not a Mortgage Lender, additional requirements may exist. All conditions and terms are at the sole discretion of the Lender.