Build it with one closing, funded in stages.
A construction-to-permanent loan funds the build in draws as work progresses, then converts to a standard mortgage when the home is complete, with a single closing. Underwriting covers you, the builder, the plans, and the budget. It’s more involved than a purchase, and it should be.
- Own a lot or are buying one and plan to build within a year or so
- Have a licensed builder and a fixed-price contract or detailed budget
- Have strong credit and reserves; construction lending is conservative
- Want to avoid two closings and two sets of costs
Seven stages, one loan.
Pre-approval of you
Income, assets, credit, and reserves, usually to tighter standards than a purchase. The payment used to qualify is the permanent loan’s.
Approval of the builder
License, insurance, references, financials, and experience with similar projects. Owner-builder arrangements are rarely allowed.
Plans, specs, and budget
Full plans, a detailed cost breakdown, a construction contract, permits in process, and a draw schedule. The appraisal is based on the completed home’s value.
Closing
One closing covers the land (or pays off a lot loan), the construction phase, and the permanent loan terms. Land equity can count toward the down payment.
Draws during construction
Funds are released at milestones after inspections, typically 5 to 7 draws. During the build you usually pay interest only on what’s been drawn.
Completion
Certificate of occupancy, final inspection, final draw. Cost overruns beyond the contingency are your responsibility, which is why the budget review is strict.
Conversion to permanent
The loan modifies to a standard 30-year (or other) mortgage. Some programs lock the permanent rate at the start; others allow a float-down at completion. Jared’s lender structure to be confirmed.
What to expect from construction underwriting.
Conventional construction-to-permanent often requires 10–20% of total cost (land plus build), with owned land equity counting. FHA and VA one-time-close programs exist with lower down payments through some lenders. Availability to be confirmed.
Scores in the 700s and meaningful reserves are typical; the lender is funding something that doesn’t exist yet.
Construction-phase rates and the permanent rate may differ. Ask whether the permanent rate is locked at closing and what happens if rates fall during the build.
Build periods of 12 months are standard, sometimes extendable for a fee. Delays from permitting, weather, and materials are common; plan contingency time, not just money.
A separate construction loan followed by a permanent mortgage means two closings and requalifying, but can offer flexibility on the permanent loan choice.
Wind-mitigation features, flood elevation, and impact-rated openings built in from the start reduce insurance premiums for the life of the home, and underwriters look for an elevation certificate in flood zones.
Beyond the usual income and assets.
- Standard income, asset, and credit documents
- Builder’s license, insurance certificates, references, and financial statements
- Executed construction contract with fixed price or detailed cost breakdown
- Full plans and specifications
- Permits or evidence of application
- Draw schedule and construction timeline
- Lot deed or purchase contract; survey
- Builder’s risk insurance and your homeowners policy to bind at completion
Common questions
Can I be my own builder?
Do I make payments during construction?
What if the build costs more than planned?
Can I use VA or FHA to build?
Tell Jared about the lot, the builder, and the budget.
He’ll outline what a construction-to-permanent loan would require and whether the numbers work.
- No credit pull, no obligation
- Not an application; no guarantee of approval or terms
- Rather talk? Call or text 954-649-0020
Building a house is a project. Financing it shouldn’t add surprises.
Jared can walk the stages with you before you sign a builder contract.