How to Apply for a Construction Perm Loan in Colorado

If you want to apply for a construction perm loan, the process starts the same way every mortgage application does — with six pieces of information — and then adds a layer specific to construction financing: your builder, your plans, and how the loan converts to a permanent mortgage when the home is finished. This guide walks Colorado borrowers through each step, in order, so you know exactly what to hand a lender and what to ask before you sign anything.

Here is the short version of the application sequence, drawn from the Consumer Financial Protection Bureau‘s guidance on mortgage applications:

• Gather the six key items lenders need to issue a Loan Estimate
• Request Loan Estimates from three or more lenders and compare them
• Notify your chosen lender that you want to proceed within ten business days
• Provide verification documents about your finances and your construction project
• Wait for the lender to approve or deny the application, then close

What is a construction to permanent loan?

A construction loan is usually a short-term loan that provides funds to cover the cost of building or rehabilitating a home. A construction to permanent loan — often shortened to a construction perm loan — is the version that is designed to convert into a longer-term permanent mortgage once the home is complete.

In general, construction loans carry higher interest rates than the longer-term mortgage loans used to purchase existing homes. That is one reason the conversion feature matters: it moves you out of construction financing and into a permanent loan when the build is done.

How the construction phase works

The money borrowed through a construction loan is typically provided in a series of advances as the construction progresses. Lenders often call these advances draws, and each one releases part of the loan amount to pay construction costs as the builder hits stages of the project.

Payments sometimes start on a construction loan six to 24 months after the loan is made. The exact structure — when payments begin, and how they are calculated during the construction phase — varies by lender, so it belongs on your list of questions when you compare Loan Estimates.

How the loan converts to a permanent mortgage

At the end of construction, you can pay off the balance in a lump sum, or you may be able to convert the loan to a conventional mortgage loan. This conversion is the defining feature of construction to permanent financing.

Here is the critical detail: if your construction loan does not automatically convert, you may have to reapply for a new loan. Your choices depend on the lender and your credit history when you apply, which is exactly why the CFPB advises comparing multiple loans, terms, and features before committing.

With the structure clear, the next question is how construction to permanent loans differ from the alternatives.

Construction to permanent vs construction only vs traditional mortgage

Construction to permanent loans sit between two other paths: construction only loans that must be paid off or refinanced separately, and a traditional mortgage used to buy an existing home. The mechanics differ in ways that change your paperwork and your risk.

Feature	Construction to permanent	Construction only	Traditional mortgage
What it funds	Building the home, then converts to permanent financing	Building the home only	Purchasing an existing home
How funds arrive	Series of advances as construction progresses	Series of advances as construction progresses	Single funding at closing
What happens at completion	Loan converts to a permanent loan (confirm whether conversion is automatic)	Balance paid in a lump sum, or you reapply for a new loan	Nothing changes; you keep paying the mortgage
Requalification risk	Lower if conversion is automatic; ask the lender	You may have to reapply, subject to credit approval at that time	None after closing

The takeaway: with construction only loans, you effectively manage two separate loans and face the market and your own credit history a second time. With construction to permanent financing, one application can carry you through if the conversion is built into the loan. Now, the application itself.

Step 1: gather the six pieces of information lenders need

To apply for any mortgage loan — construction to permanent included — you provide the lender with personal financial information and information about the property you want to finance. To receive a Loan Estimate, you need to submit only six key pieces of information:

• Your name
• Your income
• Your Social Security number, so the lender can check your credit report
• The address of the property you plan to finance
• An estimate of the home’s value
• The loan amount you want to borrow

Your loan officer can help you frame both before you submit.

Although you are not required to provide documents to get a Loan Estimate, it is a good idea to share what you have. The more information the lender has, the more accurate the Loan Estimate will be — and with construction to permanent loans, accuracy up front saves confusion later.

With those six items in hand, you are ready to shop.

Step 2: request Loan Estimates from three or more lenders

The CFPB’s first recommended step in the financing process is to request a Loan Estimate from three or more lenders. Each lender is required to send you a Loan Estimate within three business days of receiving your six key pieces of information.

The Loan Estimate lets you compare the interest rate, the annual percentage rate, closing costs, and the projected monthly payment side by side. For construction to permanent mortgages, it is also your opening to ask the questions the form does not answer on its own.

What to compare beyond the numbers

Because your choices depend on the lender, ask each one the same structural questions:

• Does this construction loan automatically convert to the permanent mortgage, or would I have to reapply?
• How are payments during construction structured — are they interest only payments, and when do they begin?
• How does the draw schedule release funds as construction progresses?
• Is the interest rate on the permanent loan a fixed rate, and when can it be locked?
• What down payment does this program expect, and how is the land I already own treated?

Comparing multiple loans, terms, and features is not optional homework here — the conversion mechanics differ enough between lenders that the answers can matter more than small differences on paper. Once you have compared, you commit.

Step 3: tell the lender you want to proceed

Once you are ready to choose a loan offer, you must notify the lender that you intend to proceed with the loan application. A Loan Estimate is not a commitment by either side until you take this step.

The ten business day window

If you do not notify a lender that you would like to proceed within ten business days, the lender may revise the Loan Estimate or close your application as incomplete, and you may need to start over. The ten business days are counted from when the lender delivers the Loan Estimate to you or places it in the mail, whichever is earlier.

For a construction to permanent application, this deadline deserves attention. Builder contract negotiations and lot decisions can drag on, and letting the window lapse means restarting the application process. Once you say proceed, the documentation phase begins.

Step 4: provide verification documents

After you notify the lender that you want to proceed, the lender may ask you to provide additional information and documents to verify what you have already submitted. The lender processes this information and may follow up with requests for clarification.

Documents about you

Expect the lender to verify the personal financial information behind your six items — your income, your credit history, and the funds you plan to bring as a down payment. Have your records organized before you are asked; every follow-up request adds a round trip.

Military borrowers around Colorado Springs should flag timing issues early. If a PCS move, deployment, or a change in BAH is on the horizon during the construction period, tell your loan officer at application rather than mid-build.

Documents about the project

Exactly what is required varies by lender, so confirm the list with your loan officer — but be prepared to discuss:

• The builder contract and who your builder is
• Detailed plans and specifications for the home
• The construction costs budget the loan amount is based on
• The lot, whether you own it or are buying it as part of the transaction

Assembling the project file is usually the slowest part of applying for construction to permanent financing, because it depends on your builder as much as on you. With everything in, the decision comes next.

Step 5: approval, closing, and the draw schedule

Once the lender has received all the necessary information, the lender approves or denies your loan application. There is no shortcut around this: approval follows complete documentation, and incomplete files stall.

After closing, the construction phase begins and funds are released in a series of advances as the work progresses. Before you close, make sure you understand the draw process in writing — how draws are requested, what triggers each release, and what happens if construction costs run past the budget.

Ask specifically about cost overruns. Knowing in advance how the lender handles a budget that grows mid-build is far better than discovering it when the framing bill arrives. Payments are the other thing to nail down before closing.

What payments look like during construction

Payments sometimes start on a construction loan six to 24 months after the loan is made, per the CFPB. That range exists because lenders structure payments during construction differently — some borrowers pay interest during the build, others begin payments later.

Ask each lender to spell out, in writing, when your first payment is due, how interest payments during the construction phase are calculated, and how the monthly payment changes when the loan converts to the permanent mortgage. If the permanent loan carries a fixed rate, ask when that rate is set and whether a rate lock applies.

Do not assume the payment structure from one lender’s quote applies to another’s. This is one of the features the CFPB tells borrowers to compare directly. The last piece is local context.

Applying for a construction perm loan in Colorado Springs

Building along the Front Range adds a few practical wrinkles to the application. Lot availability, builder schedules, and the length of the construction period all feed into the loan structure you should ask for.

For service members stationed at the local installations, the timeline question is doubly important: the construction period plus the permanent loan term should fit your realistic horizon at this duty station, and your loan officer should know your situation before structuring the loan.

This article covers the application steps only. For the broader picture of construction loans in Colorado — program types, land considerations, and how builds work across the state — start with our full guide.

Common mistakes when applying

Most construction to permanent applications that go sideways fail on process, not qualification. The recurring mistakes:

• Getting one Loan Estimate instead of three or more, and never seeing how conversion terms differ
• Missing the ten business day window to proceed, forcing a restart
• Not asking whether the loan converts automatically — then facing a full reapplication, subject to credit approval, when the house is done
• Leaving payment structure during construction vague until after closing
• Signing a builder contract before talking to a lender about how the project must be documented

Every one of these is avoidable with questions asked in the first conversation. Which brings us to the actual first step.

Your next step

Pull together the six items — name, income, Social Security number, property address, estimated completed value, and desired loan amount — and request Loan Estimates from at least three lenders. Then talk with a 719 Lending loan officer about how a construction to permanent loan would be structured for your specific build, or start an application when you are ready to proceed.

719 Lending is a Colorado Springs mortgage broker. Nothing here is a commitment to lend; all loans are subject to credit approval, and tax treatment of any mortgage costs varies — consult a tax professional for tax questions.

Frequently asked questions

What do I need to apply for a construction perm loan?

Six pieces of information get you a Loan Estimate: your name, your income, your Social Security number (so the lender can check your credit), the property address, an estimate of the completed home’s value, and the loan amount you want. Lenders must send a Loan Estimate within three business days of receiving these six items. Expect to document your finances and your construction project after you choose a lender.

Does a construction to permanent loan require two closings?

It depends on the lender. Some construction loans automatically convert to the permanent mortgage; if yours does not, the CFPB notes you may have to reapply for a new loan at the end of construction. Ask each lender directly whether conversion is automatic before you commit.

When do payments start on a construction loan?

According to the CFPB, payments sometimes start six to 24 months after the loan is made, and structures vary by lender. Ask each lender when the first payment is due, how payments during the construction phase are calculated, and how the monthly payment changes when the loan converts to permanent financing.

How is a construction loan different from a traditional mortgage?

A construction loan is usually short-term, funds are released in a series of advances as construction progresses, and construction loans generally carry higher interest rates than longer-term mortgages used to buy existing homes. A traditional mortgage funds in full at closing on an existing home. A construction to permanent loan bridges the two by converting when the home is complete.

How many lenders should I get Loan Estimates from?

The CFPB recommends requesting Loan Estimates from three or more lenders so you can compare options. For construction to permanent loans, compare more than pricing: ask about the draw schedule, payment structure during construction, and whether the loan converts to the permanent mortgage automatically.

What happens if I don’t respond to a Loan Estimate?

If you do not notify the lender that you want to proceed within ten business days, the lender may revise the Loan Estimate or close your application as incomplete, and you may need to start over. The clock starts when the lender delivers the estimate or puts it in the mail, whichever is earlier.

719 Lending Inc., NMLS #1601989 · Equal Housing Opportunity

719 Lending Inc. is not affiliated with or endorsed by HUD, FHA, VA, USDA, CHFA, the CFPB, or any government agency.

Last updated: September 2026