The good
One closing, one set of closing costs. You qualify once, up front, so a job change or a new car loan halfway through the build is less likely to blow things up. You know your permanent loan terms before the first shovel hits the dirt.
Construction loans in Fort Worth: one-time close vs two-time close.
Building a house has more moving parts than buying one: the lot, the builder, the plans, the budget, the draws. The loan has to keep up with all of it. Here's how construction loans work, the difference between one-time and two-time close, and what to send me. I'm in Fort Worth, and most of my clients are around DFW.
Apply Now (opens in new tab)Tell me the deal
I always start with a soft pull, so no hard credit ding.
How a construction loan works
A construction loan pays for the build while the house goes up. You don't get the money all at once. It goes out in draws, in stages, as the work gets done, usually after an inspection checks the progress. When the house is finished, a long-term mortgage takes over.
You have to hold title to the lot, but it doesn't have to be paid off or even bought yet. The lot can be bought as part of the deal. The appraisal is based on the plans and specs, what the finished house will be worth.
The big question is how the construction part and the long-term mortgage fit together. There are two ways to do it.
One-time close: sign once and build
With a one-time close, also called single-close or construction-to-permanent, the construction loan and your long-term mortgage close together, before the build starts. The loan papers already set the terms of the permanent mortgage, so when construction is done, the loan converts automatically. No second closing.
The catch
Less flexibility. You're locked into the terms you signed, and the build has to finish on a realistic schedule because the construction phase has time limits. A builder who runs way over can turn this into a problem.
Veteran? I do VA one-time close construction loans, so the build and your permanent VA loan close together.
Two-time close: build first, then the mortgage
With a two-time close, you close a construction loan to pay for the build. When the house is done, you close a separate long-term mortgage that pays off the construction loan. Two loans, two closings.
The good
More flexibility. You can shop the permanent mortgage when the house is finished, choose a different loan type, and a longer or more complicated build is easier to handle.
The catch
Two closings, two sets of closing costs. And you qualify again at the end, so your credit, income, and debt have to hold up through the whole build. If the market moves or your job changes, you feel it.
Veteran? A two-time close can end in a VA loan: a regular construction loan for the build, then a VA loan as your permanent mortgage when the house is done.
Which one fits your build
- Lean one-time close if You want certainty, a simple build with a solid builder, and to sign once and be done.
- Lean two-time close if The build is custom or long, you want room to shop the long-term loan later, or your income or finances will look better at the end.
- Not sure? That's normal. Send me the builder, the contract, and the budget, and I'll tell you which fits.
What trips people up
The builder
Lenders review the builder too: experience, insurance, references, and a written contract. Planning to build it yourself? Tell me up front, since that changes the options. Either way, talk to me before you sign anything.
The budget
Upgrades and change orders add up. Leave room for overruns, because the loan amount is set up front and the difference comes out of your pocket.
The land
Acreage, wells, septic, and road access all matter, especially out in Parker County and around Aledo. Tell me about the lot early.
Taxes on the finished house
The first tax bill can reflect mostly the land, and the next one catches up. I'll estimate taxes on the finished house so the payment doesn't surprise you.
Fixing up a house instead of building one? See renovation loans. Putting a manufactured home on your land? See manufactured home loans.
Buying a house a builder already has under construction, in Walsh or up by Alliance? That's usually a regular purchase loan, not a construction loan. See the conventional, FHA, and VA guides, and bring me any builder incentive so we can compare.
What to send me
- The builder's name and the signed or draft construction contract
- Plans, specs, and the itemized budget
- Lot details: the address or legal description, and what you paid or owe on it
- The expected build schedule
- Your usual income documents: pay stubs and W-2s, tax returns, or bank statements if you're self-employed
- Recent bank statements
Ready when you are.
Send the short form, call, or email. Call me early, before you sign with a builder if you can. I do one-time and two-time close, and I'll tell you straight which fits your build, or if the numbers don't work yet.
I lend in Texas, Oklahoma, California, Colorado, Montana, Florida and Georgia, and I can help in all the other states too.
I always start with a soft pull, so no hard credit ding.
Construction loan questions
What is a one-time close construction loan?
One loan, one closing. The construction loan and your long-term mortgage are closed together before the build starts. When the house is done, the loan converts to the permanent mortgage on the terms you already signed. No second closing.
What is a two-time close construction loan?
Two loans, two closings. A construction loan pays for the build, then you close a separate long-term mortgage when the house is finished. You qualify again at the end and pay closing costs twice, but you get more flexibility.
Do I need to own the lot first?
No. You have to hold title to the lot by the time the construction financing starts, but the lot can be bought as part of the construction loan.
How does the builder get paid?
In draws. The money goes out in stages as the work gets done, usually after an inspection confirms the progress. You don't get the whole loan up front.
Can I be my own builder?
Tell me up front. Building it yourself is handled differently than using a builder, and it changes which options fit. We'll go through it before you buy materials.
When should I call you?
Early, before you sign with a builder if you can. The builder, the contract, and the budget all affect the loan.
Apply Now (opens in new tab)Tell me the deal
I always start with a soft pull, so no hard credit ding.
General information, not a commitment to lend. How one-time and two-time close loans are structured follows the Fannie Mae Selling Guide's construction-to-permanent overview and single-closing rules. Subject to qualification and program guidelines. Not all applicants will qualify.
More answers on the FAQ page, or see Fort Worth home loans. Or head back home.