Single closing (OTC)
One signing, one set of closing costs, one set of disclosures. The construction loan converts automatically into the permanent mortgage at completion.
Custom and OTC construction financing in Texas.
Build your dream home in DFW, Austin, or Houston with a single closing — or stay flexible with a two-time-close construction-to-perm structure.
- One-Time Close (OTC) available
- Interest-only during construction
- Builder-friendly draw schedule
Two ways to finance your Texas new build.
A construction loan finances new home construction in one of two structures. One-Time Close (OTC) wraps construction and the permanent mortgage into a single closing — you sign once, the loan funds construction draws, then automatically converts to a permanent mortgage at completion. Two-Time Close (TTC) treats construction as its own short-term loan that gets refinanced into a permanent mortgage when the home is finished. OTC saves on closing costs and locks your permanent rate before you break ground; TTC offers more flexibility on the permanent loan choice at completion.
How a construction loan goes from blueprint to keys.
- 01
Choose your builder
Select a licensed, insured Texas builder. Most construction loans require an approved builder agreement, builder license verification, and a recent project history.
- 02
Construction loan approval
We underwrite the borrower file in parallel with the builder package: plans, specs, budget, and contingency. Lender reviews the as-completed value via appraisal.
- 03
Single closing (OTC) or interim closing (TTC)
OTC: one signing, one set of closing costs, permanent rate locked. TTC: short-term construction note closes first, permanent refinance happens later.
- 04
Builder draws as work completes
Construction funds release in scheduled draws (foundation, framing, dry-in, etc.) tied to inspections. You pay interest only on the drawn balance during construction.
- 05
Final inspection and appraisal
When the home is complete, lender orders a final inspection (and often a final appraisal) to confirm the home was built per plan and at the projected value.
- 06
Loan converts to permanent (OTC) or refinance closes (TTC)
OTC: construction loan automatically modifies into the permanent mortgage with the rate you locked at the start. TTC: a separate permanent loan closes and pays off the construction note.
Built for Texas families building, not buying.
The North Texas growth corridor (Frisco, Prosper, Celina, Aubrey, Pilot Point), the Austin sprawl from Cedar Park to Dripping Springs, and the Houston suburbs are where Texas families are increasingly building rather than buying existing inventory. Construction financing has its own rhythm — builder agreements, draw schedules, conversion mechanics — and getting it wrong costs months. We work with custom builders and major production builders (Lennar, DR Horton, Toll Brothers, Highland Homes, Perry Homes and others), and we structure the file to fit how your specific builder operates.
Construction is the right tool when:
- You are doing a custom build with a Texas builder
- You are buying a new build from a production builder (Lennar, DR Horton, Toll Brothers, Highland Homes, etc.)
- You are building in active North Texas markets — Frisco, Prosper, Celina, Aubrey, Pilot Point, Anna, Melissa
- You want an interest-only construction period to manage cash flow during the build
- You are a veteran using the VA construction loan option
Why a construction loan from a broker beats going to the builder’s lender.
Interest-only during build
You pay interest only on the funds drawn for construction — not on the full loan amount — during the build period. That keeps cash flow predictable while you are still paying current housing.
Lock your rate before completion
OTC programs let you lock the permanent mortgage rate before construction starts. In a rising-rate environment, that can be a meaningful cost protection.
Works with most Texas builders
We approve builders from regional production builders to local custom builders. If your builder is licensed and insured, we usually have a path.
Custom and production builds OK
Whether you are designing from scratch with an architect or buying from a builder’s plan-set in a master-planned community, we have program fits for both.
Conventional, FHA, and VA construction options
OTC structures are available across conventional (95% LTV typical), FHA (3.5% down), and VA (zero down for qualifying veterans).
1
Closing if you choose OTC
Construction loan questions, answered.
What is OTC vs Two-Time Close?
One-Time Close (OTC) is a single loan that funds construction and then automatically converts to your permanent mortgage at completion — one closing, one set of costs, one rate locked at the start. Two-Time Close (TTC) is two separate loans: a short-term construction loan first, then a permanent mortgage that refinances it when the home is done. OTC saves closing costs; TTC offers more flexibility on the permanent loan at completion.
How do builder draws work?
Construction loans don’t fund the full loan amount on day one. Funds release in scheduled draws (typically 4–8 across foundation, framing, mechanical rough-in, dry-in, interior finish, and final), each triggered by an on-site inspection that confirms the work is complete. You pay interest only on the funds drawn so far, not on the full loan amount.
Can I lock my interest rate during construction?
On OTC structures, yes — you typically lock the permanent rate at construction loan closing, before ground breaks. Some programs offer extended lock periods or float-down options for an additional cost. On TTC, you lock the permanent rate when you refinance the construction loan, so your final rate is set at completion rather than the start.
What about cost overruns?
Construction loans require a contingency reserve (typically 5–10% of the build budget) for unexpected costs. If the build runs over budget beyond the contingency, the borrower is responsible for the difference. We structure budgets realistically with builder input so contingency reserves are sized appropriately.
How long are construction periods?
Most Texas construction loans run 6–12 months for the build period. Custom builds are often 9–12 months; production builds in master-planned communities are often 6–9 months. The construction note period is set at closing — extensions are possible but typically come with fees.
Do I need to use a specific builder?
No, but the builder must be approved by the construction lender. Approval typically requires a current Texas builder license, general liability insurance, recent project history, and a builder agreement. Most established Texas builders pre-qualify quickly. We do the builder review in parallel with your borrower file.
Building in Texas? Let’s structure the financing.
Construction loan requirements at a glance.
- 680+ FICO typical (some lenders down to 660 with compensating factors)
- 10–25% down (down payment can include lot equity if you already own the land)
- Approved builder + signed builder agreement
- Detailed plans and specifications
- Realistic build budget with contingency reserve
- Builder license and general liability insurance
- Texas property
- Owner-occupied at completion (investment construction is a separate program)
OTC vs TTC vs Construction-Perm Refinance.
| Closings | Rate locked at | Cost | Best for | |
|---|---|---|---|---|
| One-Time Close (OTC) | 1 | Construction loan closing | Lower (single set of costs) | Buyers who want rate certainty and the simplest structure |
| Two-Time Close (TTC) | 2 | Permanent refinance closing | Higher (two sets of costs) | Buyers who want flexibility on the permanent loan at completion |
| Construction-Perm Refinance | 1 (refinance) | Refinance closing | Refinance costs | Borrowers who already have a stand-alone construction loan and need to refinance into a permanent mortgage |
Ready to move on a New Construction Loan?
Get a soft-pull pre-approval in minutes. No credit hit, no surprises.
Other ways we close
Land Loans
Finance the lot or raw land first, then convert to a construction loan when you’re ready to build.
Learn moreConstruction & Renovation
Buy a property and finance the rehab in one loan — FHA 203(k) and Fannie HomeStyle.
Learn moreConventional Loans
Standard conventional financing for completed homes — useful when you’re ready to convert from construction.
Learn more