New Construction Financing Options

We offer one-time close construction loans which cover the temporary financing during construction, as well as the permanent financing upon the completion of construction. While it is commonplace for lenders to offer construction loan ARMs (Adjustable Rate Mortgages), our program on conforming loan amounts ($484,350 and under) gives the borrower the option to convert into a fixed-rate loan after construction is completed at no cost.

The Waukesha State Bank hottest product for construction lending is easily our Bridge Loan (subject to credit approval). Unique to the Southeastern Wisconsin market, our Bridge Loan is different in that it allows buyers the ability to liquidate up to 90% of a borrower’s fair market value on their current home. We cross-collateralize the homeowner’s current primary residence with the new home they will be building, which can reduce or eliminate the need to bring cash to closing. This also typically reduces the borrower’s monthly debt liabilities during construction. Another huge benefit of our Bridge Loan Program is the ability to expand a borrower’s debt to income ratio calculation during the build. Where other lenders inform a prospective customer that they must sell their current home to qualify for a construction loan, we frequently say yes!

Expanding on our one-time close construction loan process, I would say that makes Johnson Financial Group unique. Some lenders will say they can offer a no-cost refinance at the end of construction, but a refinance does cost the lender and this cost is passed on to the consumer through a higher rate. When we convert the borrower into a fixed rate loan, the borrower gets street rate at truly no additional cost. It’s more convenient and less costly for all involved.

Our construction loan products (subject to credit approval) are all interest only with no private mortgage insurance regardless of down payment during the build. At Waukesha State Bank, we will lend with as little as 5% down payment and also offer both conforming and jumbo construction loans. I personally have over two decades of construction lending experience, and as a community bank, we are known for being very flexible. On a daily basis, I enjoy finding solutions to help homeowners build. That means offering competitive rates as well as a quick and easy process. It means working with appraisers who are knowledgeable and who have a demonstrated track record for valuing new home construction in our region. And it means offering new construction products that help make the homeowner’s transition from loan application into occupying a newly built home as painless as possible. It even means lending anywhere in the state, so that Demlang Northwoods build can become a reality!

Getting started with a pre-approval for new construction financing is easy and you should plan to provide these documents:

• 30 days of current paystubs
• Last 2 years of W-2s
• Most current 2 months of bank statements
• We also offer the option to apply in-person or through our convenient online
  application.

For a full application, the following documents are necessary for underwriting:

• Signed building contract and builder specifications
• Fully-executed vacant land offer to purchase. If a borrower already owns the lot, we will ask them to provide the closing disclosure/settlement statement received when they purchased the lot
• Recent paystubs reflecting 30 days of income
• Most recent two months of complete bank statements
• W-2s from the last two years
• Personal tax returns with all schedules from the last two years
• Evidence of homeowner’s insurance
• Copies of driver licenses
• If a borrower is self-employed, we will additionally ask for last two years of corporate returns with all schedules including K-1’s if applicable, the most recent quarterly business profit and loss statement
• For a pre-approval, all that is needed would be paystubs and W-2s

Once the borrower has selected both a lot and builder, is able to provide an accepted vacant land offer to purchase, and signed construction contract with specs and plans, we can get the borrower’s construction financing locked. They can also lock their fixed rate permanent financing up to 6 months before construction is complete.

Fannie Mae and Freddie Mac do not provide funding for new home construction, which is why you must work with a local bank to secure construction financing. Once a borrower has an occupancy date, we can lock them into long-term fixed rate financing should they so desire. We also have programs that will allow a borrower to lock into longer-term financing six months in advance of occupancy, with a free float down should rates decline during their build.