Build Your Home with a Construction Loan
Financing a custom home is distinct from purchasing an existing property. We assist Texas borrowers in navigating their construction financing options, which include construction-to-permanent loans and Two-Time Close construction loans tailored for custom home projects.
Construction Financing Made Simple
Whether you already own land, are purchasing land for your build, or collaborating with a custom builder, construction financing can effectively bring your project to fruition. Our team specializes in reviewing the loan structure, builder documents, plans and specs, appraisal requirements, draw schedule, and final completion steps for your construction-to-permanent loans.
We provide a variety of custom home loans, including Texas construction loans, available in all 50 states, pending credit approval, builder approval, project approval, appraisal, agency guidelines, and investor requirements.
Construction Loan Options
One-Time Close Construction-to-Permanent
A One-Time Close loan provides eligible borrowers the opportunity to close once before construction begins. This innovative financing starts as construction financing and seamlessly transitions into permanent mortgage financing once the home is completed. This option is particularly beneficial as it may help reduce duplicate closing costs, especially when compared to utilizing separate construction and permanent loans.
Best for: Borrowers interested in one closing, a single initial approval process, and a streamlined construction-to-permanent loans structure, particularly for custom home loans in Texas.
Two-Time Close Construction Financing
A Two-Time Close loan utilizes a short-term construction financing option initially, followed by a separate permanent mortgage once the home is complete. This structure can be advantageous for custom home loans, teardowns, or borrowers looking for more flexibility with their permanent financing after construction.
Best for: Borrowers who prefer a distinct construction loan and permanent loan structure, particularly in the realm of Texas construction loans and construction-to-permanent loans.
Lot Equity
Can I Use Land Equity?
In many construction financing scenarios, land equity can help satisfy part of the borrower’s required investment. The rules depend on the loan type, how long the borrower has owned the land, whether there is a lien on the land, and whether the land was purchased, inherited, or gifted.
Examples include:
Conventional: Land equity may generally be considered when the borrower owns the land and the transaction is structured properly, especially in the context of custom home loans.
FHA: The treatment of land value may depend on whether the land has been owned for more or less than six months, which can affect options like construction-to-permanent loans.
VA: VA land equity rules are more restrictive, particularly when land is owned free and clear or gifted, impacting available Texas construction loans.
USDA: USDA has separate property, location, income, and eligibility requirements that also apply to construction financing.
Because lot equity can change the structure of the loan, we review this early in the process.
Builder Approval Requirements
Before closing, it's essential to review the builder and the project, especially when dealing with construction financing options like construction-to-permanent loans or custom home loans. Common builder documents include:
Builder documents:
Builder questionnaire, builder license if applicable, general liability insurance, workers compensation insurance or exemption, W-9, government-issued photo ID, and VA builder registration if applicable.
Project documents:
Construction contract, cost breakdown, draw schedule, plans and specifications, builder’s risk insurance, permits if required, appraisal, and any HOA approval if applicable.
Working with an experienced builder can streamline the process, helping to keep the file moving and reduce delays before closing and during the draw process, which is especially important for Texas construction loans.
Ready to Start?
The first step in securing your Texas construction loans is reviewing your land, builder, construction contract, estimated cost to build, and loan program eligibility, especially if you are considering construction-to-permanent loans or custom home loans.
Permits – Confirm whether the city or county requires building permits for your project.
Builder Docs – Gather necessary builder documentation, including the builder questionnaire, insurance, W-9, license if applicable, and builder’s risk insurance.
Final Appraisal – The appraisal is based on the completed home using the plans, specifications, and construction contract, which is crucial for your construction financing.
Draw Schedule – Prepare a draw schedule that aligns with the contract, cost breakdown, and project milestones.
