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Construction Loans

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Build the home of your dreams on your terms.

Building your dream home is a huge step, involving both time and money. But don’t worry! At TEG Federal Credit Union, we’re here to simplify the process for you. With our Construction-to-Permanent loans (CTP).

What is a Construction-to-Permanent (CTP) Loan?

A Construction-to-Permanent loan allows you to borrow money to build a home. Our CTP loan provides options for:

Financing the construction of a new home on your lot.

Financing the purchase of a lot as well as the home construction.

Site-built Modular Kits and Log homes are eligible.

Our CTP features a single close, with interest only during construction, that automatically converts to a permanent mortgage upon completion.

Construction Loans

The TEG CTP loan product is limited to Dutchess, Orange, Ulster, Putnam, Rockland, Sullivan, and Westchester Counties. Exceptions outside of these counties, while still in New York State, will be considered on a case-by-case basis.

TEG’s Construction to Perm (CTP) loan simplifies the process of building your new home. It combines your construction loan and permanent mortgage into a single loan, saving you time and hassle

Turn your dream of homeownership into reality with a streamlined financing solution.

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Jessica and the TEG team were extremely helpful in finding a home loan that would suit our needs. Not only was she knowledgeable, she also went above and beyond answering questions and emails after hours. We ended up doing a construction to perm loan. This being the first time my husband and I were building, we had so many questions. It was comforting to know that Jessica was able to answer our questions at any time. I would definitely recommend Jessica to anyone searching for a home loan!

Zillow review

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Mathew Bannan was the best I couldn’t have asked for more completely upfront with us and walked us through every step of the process made it simple and easy for us to understand and our loan was completed.

Cestaro

Construction Loans FAQs

What types of properties can I finance with a CTP loan?

Single-family homes. This includes stick-built, modular, and timber frame or log kits.

How are CTP loan proceeds disbursed?

Construction proceeds are disbursed per your approved construction draw schedule. Your mortgage loan officer or processor will provide a draw schedule template. An initial advance to your builder up to 80% of your land value may be itemized on the draw schedule to be disbursed by Mortgage Servicing after the loan has closed.

Subsequent draws will be for completed work and require a draw request with inspection. Advances for special order items, such as custom cabinets or windows, that are itemized separately from labor on the draw schedule may be requested, with payment to be issued directly to the vendor.

Final payment for modular or kit home delivery can be requested without an inspection.

Can I finance an investment property?

No. The Construction to Perm Loan may only be used with the property that is intended as an owner-occupied primary residence or second home. Our Business Lending department can assist with construction to perm financing for investment properties and builder construction only.

Can a subcontractor or materials supplier file a construction lien against my home?

Yes. Even though you might pay your builder, if your builder does not pay the subcontractors or material suppliers, they can file a mechanics lien against your property.

Can I act as my own general contractor?

No. A qualified general contractor or builder is required to oversee the project.

Who pays for cost overruns during the construction phase?

The Borrower is responsible for paying the overages out of pocket. If requested, the borrower may include a contingency reserve in their construction draw schedule to buffer any change orders or cost overruns.

Can I start my project before the loan closing?

No, you may not start the project before loan closing. An early start may hinder our ability to obtain proper title insurance coverage and may prevent us from closing your loan.

How is interest calculated

Interest is based on the funds advanced calculated at the note rate for the loan.

Do I have to own my lot prior to closing?

No, you do not. The lot may be purchased simultaneously with closing the Construction to Perm loan.

How much will my property taxes be on my completed home?

TEGFCU will use the appraiser’s estimate as to what your taxes will be at completion. Your local tax assessor may be able to answer any further questions.

I paid cash for my lot. Can I get cash back at closing?

No. We consider this equity into the project and credit towards your down payment. Cash back to the borrower is not allowed. You may use the equity in your land for an initial disbursement to your builder to get the project started.

What happens if my project is not completed prior to the maturity of the construction phase?

You may request an extension for your project to allow time to complete construction. If granted, conversion to the permanent phase will still occur at the end of your scheduled construction term, and you will begin making principal and interest payments on your loan amount. An interest-bearing escrow holdback account will be established to fund the remainder of your project.

Have additional questions? See our full list of Mortgage FAQs here.

Find helpful articles, tools, and other great resources to help you with your homebuying journey.

Apply for a TEGFCU Mortgage

To apply for a mortgage, you must either be a current member or become a member before closing. Membership is open to anyone (and their immediate families) who lives, works, worships, or attends school in Dutchess, Orange, Ulster, Putnam, Rockland, Sullivan, and Westchester County, NY with an initial $5 deposit, as well as Members of the Dutchess County SPCA or Child Care Council of Dutchess and Putnam Inc which are headquartered in our field of membership. Also, if you are purchasing a primary residence in one of these counties you are eligible for membership.

Explore Our Products

Whether you are looking for a traditional mortgage or need something a little outside the box, our lending experts will go the extra mile to find the financing that is right for you.

If you’re ready for home ownership but want to start with a lower interest rate and therefore, a lower monthly payment, an adjustable-rate mortgage from TEGFCU may be the way to go.

Start your homebuying journey with tools and resources to help you better understand the mortgage process.

We Do Business in Accordance with Federal Fair Lending Laws – Fair Housing Poster.

Home Mortgage Disclosure Act Notice – The HMDA data about our residential mortgage lending are available for review. The data show: Geographic distribution of loans and applications Ethnicity, race, sex, and income of applicants and borrowers Information about loan approvals and denials. HMDA data for many other financial institutions are also available online. For more information, visit the Consumer Financial Protection Bureau’s website.

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