source:
  type: guide
  id: fnma-sel-b5-3.1-03
  authority: 'Fannie Mae Selling Guide B5-3.1-03 — Conversion of Construction-to-Permanent
    Financing: Two- Closing Transactions'
  description: 'Fannie Mae Selling Guide B5-3.1-03 — Conversion of Construction-to-Permanent
    Financing: Two- Closing Transactions.'
  coverage_tier: operative
obligations:
- id: fnma-sel-b5-3.1-03-full
  canonical_id: fnma-sel-b5-3.1-03-full
  section: 'Fannie Mae Selling Guide B5-3.1-03 — Conversion of Construction-to-Permanent
    Financing: Two- Closing Transactions'
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: 'Fannie Mae Selling Guide B5-3.1-03 — Conversion of Construction-to-Permanent
      Financing: Two- Closing Transactions'
    source_class: fnma-guide
    source_url: https://singlefamily.fanniemae.com/media/document/pdf/selling-guide
    snapshot_id: 5f7b8b79da595d76
    fetched_at: '2026-05-25T14:09:57Z'
    content_hash: sha256:98cf85a02861bbe84914a0e339b327c8fc131869a8a573882007bbeea60c5701
    paragraph_quote: 'B5-3.1-03, Conversion of Construction-to-Permanent Financing:
      Two- Closing Transactions (08/07/2019) Introduction This topic contains information
      on conversion of construction-to-permanent ﬁnancing loan eligibility for two-
      closing transactions, including: Two-Closing Transactions Overview Eligible
      Loan Purposes for Two-Closing Construction-to-Permanent Mortgages Two-Closing
      Transactions Overview Two-closing construction-to-permanent mortgage transactions
      utilize two separate loan closings with two separate sets of legal documents.
      A modiﬁcation may not be used to update the original note, rather a new note
      must be completed and signed by the borrower(s). The ﬁrst closing is to obtain
      the interim construction ﬁnancing (and may include the purchase of the lot),
      and the second closing is to obtain the permanent ﬁnancing upon completion of
      the improvements. Fannie Mae does not purchase construction loans (the ﬁrst
      closing); however, Fannie Mae does purchase loans that were used to provide
      the permanent ﬁnancing. The lender that provides the permanent long-term mortgage
      may be a diﬀerent lender than the one that provided the interim ﬁnancing. The
      lender must underwrite the borrower based on the terms of the permanent mortgage.
      Eligible Loan Purposes for Two-Closing Construction-to-Permanent Mortgages In
      a two-closing construction-to-permanent transaction, the permanent mortgage
      delivered to Fannie Mae may be closed as: a limited cash-out reﬁnance transaction,
      or a cash-out reﬁnance transaction. Two-closing construction-to-permanent mortgages
      are subject to the limited cash-out and cash-out reﬁnance maximum LTV, CLTV,
      and HCLTV ratios based on the property type provided in the Eligibility Matrix
      , as applicable. For the borrower to be eligible for a cash-out reﬁnance transaction,
      the borrower must have held legal title to the lot for at least six months prior
      to the closing of the permanent mortgage. All other standard cash-out reﬁnance
      eligibility and underwriting requirements apply. Note: Two-closing cash-out
      reﬁnances are not permitted on a manufactured home. Recent Related Announcements
      The table below provides references to the Announcements that have been issued
      that are related to this topic. Published May 6, 2026 727 Announcements Issue
      Date Announcement-SEL-2019-07 August 07, 2019 Section B5-3.2, HomeStyle Renovation
      Mortgage'
  judgment: false
