Citizens Bank serves the Northeastern United States with lending products to help finance new prefab and modular homes. They offer both lot loans to finance the purchase of land and construction loans to finance the build process. While project requirements and borrower details like credit score may affect the loan amount on offer, the maximum loan amount from Citizens Bank is $3,000,000. 

Citizens Bank offers construction-to-permanent loans (C2P), meaning they combine financing for construction and the final mortgage into one loan. This option locks the permanent interest rate 18 months in advance, protecting borrowers from rising interest rates.

For financing modular homes, Citizens Bank relies on a “curbside funding” schedule. First, borrowers get a 10% draw at closing to cover the cost prior to the home being delivered. This initial draw is typically used as a downpayment to the manufacturer to begin the construction process. During construction, borrowers make interest free payments based on the amount of money disbursed to the builder. When the modular home builder delivers the home and attaches it to the foundation, they get a draw to pay for the home. Smaller draws will then be dispersed as the project proceeds. While this type of financing can still be used to finance a prefab or modular home, this structure can be problematic for many modular home builders. Some modular home builders deliver homes that can be up to 95% complete, therefore requiring more money in the early stages of the build process rather than at the time of delivery.

After the home is completed, the borrower begins to make regular mortgage payments. Borrowers can choose a fixed-rate loan or a 5/1, 7/1, or 10/1 adjustable rate mortgage (ARM) as their permanent financing.

Notes on Citizens Bank’s Prefab and Modular Home Construction Loan:

• Consultation/Application - A loan officer meets with the borrower as they provide documentation for their loan. Within 3 business days of submitting their loan application, borrowers get documents and disclosures to review.

• Loan processor assigned - A loan processor contacts the borrower and continues to check in to ensure that the loan application is processed.

• Appraisal ordered - The appraisal is ordered and applicable fees are collected.

• Conditional approval - Within 3 business days of the loan decision (underwriting decision), the bank notifies borrowers of any additional documentation needed for final approval. Before closing, borrowers receive copies of all property appraisals as well as other written home valuations in connection with the loan application. Borrowers get 3 business days to review and ask questions.

• Final approval - Borrowers get notified when the loan is approved. The loan processor will then begin the loan closing. Borrowers get a copy of the closing disclosure at least 3 business days prior to loan closing.

• Loan closing - The closing agent schedules a date, time, and location for the loan closing. Borrowers on the loan must attend the closing to review and sign the home loan documents to finalize the transaction.

• Loan setup and built - The set-up process takes about 7-10 business days. 

• Draw administrator assigned - A draw administrator is assigned to facilitate construction disbursements and serve as a contact person during construction.

• Construction begins - Funds are disbursed periodically as disbursement requests are generally made by the builder. During the construction phase, borrowers are billed monthly for interest owed on the funds already disbursed (principal payments are not required yet).

• Construction finished - After construction, the borrower and the builder provide more documents for the bank to disburse the final draw. The loan then transitions to the permanent phase as borrowers begin making monthly mortgage payments.