A construction permanent mortgage is for the most part exactly like it sounds. The initial loan is a construction loan and then there is a modification into the final loan. This loan is used when a consumer is building a custom home. During the construction period, the consumer will pay interest only on the amount of the draws. Once the home is completed, the loan will be converted into a permanent mortgage and the full principle and interest payments will begin. The construction to permanent mortgage is often preferred over a standard construction mortgage because the closing costs are substantially less and the process is more streamlined.