Financing for custom, high balance home construction
A Jumbo Two-Time (2x) Close Construction Loan provides flexible financing for larger construction projects with separate construction and permanent mortgage closings.
What is a two-time close Jumbo Construction Loan?
A Jumbo Two-Time Close Construction Loan is designed for home buyers building custom or luxury homes that require financing above traditional conforming loan limits. Unlike a One-Time Close Construction Loan, this program separates your construction financing from your permanent mortgage. You'll first close on a short-term construction loan that finances the building process. Once construction is complete, you'll apply for and close on a separate jumbo mortgage for your long-term financing. While this approach involves two applications and two closings, it also provides greater flexibility throughout your project. Rather than committing to your permanent mortgage before construction begins, you'll choose your long-term financing when your home is finished based on your current financial situation, mortgage options, and market conditions.
Why choose a Jumbo two-time close Construction Loan?
A Jumbo Two-Time Close Construction Loan is designed for borrowers building luxury and custom homes that require financing beyond traditional conforming loan limits. Unlike a conventional Two-Time Close Construction Loan, a jumbo construction loan offers higher loan limits for larger, more complex projects while giving you the flexibility of separate construction and permanent financing. Instead of locking in your long-term mortgage before construction begins, you'll apply for your permanent jumbo mortgage after your home is complete, allowing you to evaluate your financing based on your current financial situation, market conditions, and home value.
Situations that could benefit from a two-time close Construction Loan
Building a more expensive home
A Jumbo Construction Loan allows for loans up to $1.5M, which is higher than the Conventional Loan limit
Unexpected costs
Job loss, medical expenses, new child, new car...there's a lot of surprises life can throw at you in a year
Improved credit/debt-to-income
This could mean you qualify for better loan terms and potentially rates
Market rate improvement
If the market interest rate improves from the time you start construction to the time you move-in, you can take advantage of lower rates without refinancing
Home sale proceeds
If you sell another home after construction on your new home begins, you can use those proceeds to lower your next mortgage amount
Construction changes
The construction process can come with unexpected roadblocks, or you might decide you want certain add ons which can change your timeframe and your financial picture
Considerations when choosing a Jumbo two-time close Construction Loan
A two-time close Construction Loan can be great for many different reasons, but it's important to keep in mind the following:
- You'll have to apply (and qualify) twice. Once for your Construction Loan, once for your permanent mortgage (but this could benefit you if your credit, debt, or financial situation improves)
- Two sets of closing costs. Since you'll have two closings, you'll have two sets of closing costs
- You'll be making interest-only payments during construction. This is kind of a pro and a con. While the payments will be lower during construction, it also means you won't be building equity during this time
What to know before getting a two-time Construction Loan
- Min credit score: 720
- Min loan amount: $1 over conforming loan limits
- Max lan amount: $1.5M
- 1-2 unit primary residences & 1-unit second home
- Min 20% down payment
- Interest-only payments during construction
- Land/lot financing available
- Up to 12 months initial construction term; up to 6 months extension
How it works
- Apply for your Construction Loan: Meet with a construction lending specialist to review your project, determine your budget, and apply for construction financing.
- Close & start building: Close on your construction loan so your builder can begin work. Funds are released in scheduled draws as construction milestones are completed.
- Build your home: During construction, you'll typically make interest-only payments while inspections verify each phase of the project.
- Apply for your permanent mortgage: As construction nears completion, you'll work with your lender to apply for your long-term mortgage based on your current financial qualifications and financing goals.
- Complete your second closing: After your home passes its final inspection and receives a certificate of occupancy, you'll close on your permanent mortgage and move into your new home.
Frequently Asked Questions
We’re here to help! Find answers to your everyday banking questions.
A Jumbo Two-Time Close Construction Loan is a financing option for borrowers building higher-value homes that exceed conventional loan limits. It uses two separate loans: a short-term construction loan to finance the build, followed by a separate jumbo mortgage after construction is complete. This structure gives borrowers the flexibility to shop for permanent financing once their home is finished.
The first loan funds the construction of your home, with money released to your builder through scheduled draw payments as work progresses. Once construction is complete, you'll apply for a separate jumbo mortgage to pay off the construction loan, creating two distinct applications and two closings
A Jumbo Two-Time Close Construction Loan can provide greater flexibility for luxury home buyers. Because your permanent mortgage isn't finalized until construction is complete, you can compare jumbo mortgage options, choose different loan terms, or take advantage of lower interest rates if market conditions improve before your second closing.
A jumbo construction loan is generally used when the permanent mortgage exceeds the conforming loan limits established for your area. Loan limits vary by county, so whether your project requires jumbo financing depends on your location and the amount you need to borrow.
Yes. Depending on your loan structure, you may be able to finance both the land purchase and the construction costs.
During construction, borrowers typically make interest-only payments based on the amount that has been disbursed to the builder, not the full loan amount. Once construction is complete and your jumbo mortgage closes, you'll begin making regular principal and interest payments.
Yes. Because there are two separate loans, you'll typically complete two underwriting processes: one for the construction loan and another for the permanent jumbo mortgage after construction is complete. Your lender will verify that you continue to meet qualification requirements before the second closing.