construction to perm loan

[Kay Kim]

Hello BP family,  hope everyone is staying cool in this heat. 

I have some newbie question here. 

Can I get a construction to perm loan for a SFR? If so, what kind of permanent loan should I get after the construction is done. Also, I heard something about "loophole" which is an idea of starting with second home loan then switch to rental property. As little as I know that I shouldn't get a second home loan for a property which intend to rent it out full time, though. So confusing. I would like to stay away from anything illegal process which could potentially lead to mortgage fraud. Little help, please?

[Upen Patel]

@Chris Seveney Thanks for the tag.

@Kay Kim Yes, you can get a construction loan, it depends on the specifics of the transaction. You don't want to indicate that its a 2nd home loan for the construction and then refi into an investment loan. We would do the construction and end loan, so I will cause a lot of issues with underwriting and you can potentially get in trouble for misstating on the initial construction loan. LTV on a 2nd home construction is not going to be any lower than an investment loan.

Keep in mind that you will have to qualify for the construction loan, even if it is an investment construction, without any rental income.

Hope this is helpful.