Umpqua Bank is a Western U.S. based bank that offers financing options for new prefab and modular home construction projects. Umpqua Bank offers a construction to permanent loan that is well-suited for individuals looking to secure financing for a new prefab or modular home build. This single-close loan means that borrowers initially receive a loan from Umpqua to finance the construction of their home and once the home is completed and certified as finished, the loan converts into a permanent mortgage. Umpqua Bank’s construction to permanent loan for prefab and modular home financing is typically amortized over 30 years though there is no repayment penalty. While project requirements and buyer qualifications will vary, the maximum loan amount is approximately $3,000,000.

From a process standpoint, applications can only be submitted if they include a set of working drawings and a complete builder package that includes information about the builder, the materials, budget details, and a signed contract. For these reasons, it is not possible to use Umpqua’s construction as a permanent loan to also finance the purchase of land. If the application is approved, during construction, payments are interest only on the amount that is being used. During construction, the draw schedule is structured to disburse up to 50% of the funds at the time the home is ordered, 40% once the home is delivered to the site, and the remaining 10% once the home is certified as move-in ready.

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

Umpqua’s Lending Timeline: 

• Project approval – if the package is complete, it usually takes just 48 to 72 hours for approval from when an application is submitted

• Order appraisal – Once the project is approved, an appraisal is ordered.  This can take two to three weeks

• Credit underwriting – An application for credit approval will take place at the same time as the appraisal and work will also begin on processing/underwriting to complete as much as possible until the appraisal is ready

• Once the project and credit approvals and the appraisal are completed, the loan can get the final sign-off and is prepared for closing.  This can happen within a week or two of getting the appraisal

• Closing usually takes about a week for all of the signing, funding, and finally closing

• Project starts!

Additional notes:

• The payments during construction are interest only and become amortized over 30 years once the construction is completed 

• The rate is the same during the construction period and the first ten years of the loan 

• After the initial ten years of the fixed rate, it is an adjustable rate for the remaining life of the loan

• The highest the rate can ever go during the adjustable period is five above the start rate

• There is no prepayment penalty, so you can refinance whenever you want

• First Draw = up to 50% at the time the home is ordered. The funds are paid directly to the factory or flooring source

• Second Draw = up to 40%, disbursed when the home is delivered to the site. Funds are paid directly to the factory or flooring source in an amount that satisfies the invoice total. Any remaining funds are paid to the dealer

• The Final Draw = 10% and is disbursed when the home is 100% complete. This amount is paid to the retailer unless there is still a balance owing on the invoice

• Loan to Value amounts will differ depending on the size of the loan, typically loans can be 90% LTV if the loan size is $584,250 or lower and 80% LTV if higher