Construction Loans
Construction Loans With a Single Closing
Turn a set of plans and a piece of land into a finished home with one approval and one closing. Our one-time close construction loan covers the build, releases funds in stages as work is inspected and then becomes your permanent mortgage when the home is complete.
Finance the Home You Will Build
How construction-to-permanent financing works
Building a house involves two phases of financing. First, money has to flow to your builder as framing, mechanical work and finishes are completed. Then, once a certificate of occupancy is issued, you need a long-term mortgage. Traditional two-loan setups make you qualify, pay closing costs and face rate uncertainty twice.
A construction-to-permanent loan rolls both phases into one transaction. You close before ground is broken, terms for the permanent loan are set up front and, during the build, you generally pay interest only on the amount drawn so far. When the home is finished, the loan converts to a standard mortgage without a second closing.
The Smith Mortgage Group, Powered by FCM, offers construction financing for custom homes and major renovations, with conventional and jumbo structures and, where program guidelines allow, government-backed options. We coordinate the draw schedule and inspections with your builder so you can focus on choosing finishes rather than chasing paperwork.
Why Build With Us
Designed around the way homes get built
One Closing
Close once before construction starts and avoid requalifying or paying a second round of closing costs at completion.
Interest-Only Draw Period
During construction you typically pay interest only on funds already released, which keeps early payments manageable.
Land Equity Counts
If you already own your lot, its equity can often go toward your down payment requirement.
Renovation and Rebuild
Finance large additions, gut renovations or a tear-down and rebuild when a standard remodel loan would fall short.
Builder Coordination
We work with your builder on budget review, draw requests and inspections so funds arrive when each phase is ready.
Who It Fits
Is a construction loan a fit for your project?
Construction financing usually suits borrowers who:
- Have selected a licensed builder and a set of plans with a realistic budget
- Own land outright or with a small balance and want to apply that equity
- Need to buy a lot and build on it under one financing arrangement
- Are planning an addition, full gut renovation or tear-down rather than cosmetic updates
- Are building a higher-value custom home that may require jumbo financing
- Prefer lower interest-only payments while they continue to pay current housing costs
Weighing a build against buying an existing home? A free mortgage consultation can compare both paths, and the affordability calculator helps you set a realistic budget.
Compare
One-time close versus two-time close
Both structures can finance a new home. The differences show up in cost, risk and convenience.
| Feature | One-time close | Two-time close |
|---|---|---|
| Number of closings | One, before construction | Two, before and after construction |
| Qualification | Once, up front | Again for the permanent loan |
| Permanent loan terms | Set at the initial closing | Determined after the build |
| Closing costs | One set | Two sets |
| Flexibility to switch lenders | Limited | Greater, with more risk |
Program availability, down payment and rate terms depend on qualification, underwriting and program guidelines.
Requirements
What lenders review before a build
Construction lending adds a few items to a normal mortgage file. Underwriting reviews you as a borrower and also evaluates the builder, the plans and the projected value of the finished home. An appraisal is completed based on the plans and specifications rather than an existing structure.
- Signed construction contract with a qualified, licensed builder
- Plans, specifications and an itemized cost breakdown
- Land deed or lot purchase contract
- Standard income, asset and credit documentation
- Builder information such as licensing and insurance
- Reserves for overruns, where the program requires them
How It Works
Your build, phase by phase
Plan and pre-approve
We review your plans, budget, land and builder, then structure the loan and confirm what you can comfortably finance.
Close before groundbreaking
Sign once, set your permanent loan terms and fund any lot payoff or purchase at the same time.
Build with scheduled draws
Your builder requests funds at each milestone. After an inspection confirms the work, the draw is released and interest accrues only on what has been paid out.
Convert and move in
Once the home passes final inspection, the loan shifts to regular principal-and-interest payments with no second closing.
Answers
Construction loan FAQs
What happens if my build runs over budget?
Cost overruns are usually your responsibility, which is why many programs require a contingency or reserves. A detailed builder budget reviewed before closing is the strongest protection against surprises.
Can the lot I already own reduce my down payment?
Frequently, yes. Equity in land you own can typically be credited toward the down payment. If you are still buying the lot, it can often be included in the construction loan.
Am I allowed to act as my own general contractor?
Most construction-to-permanent programs require a licensed, qualified builder. Owner-builder arrangements are uncommon and depend heavily on program guidelines, so ask us before you plan around one.
How are payments handled while the house is under construction?
You generally make interest-only payments on the funds drawn so far. Because the balance grows as work progresses, payments start small and rise toward the end of the build.
Can a construction loan pay for a major remodel of my current home?
Yes, when the project is substantial, such as an addition, full gut renovation or tear-down and rebuild. Smaller updates may fit better with a cash-out refinance.
How long does approval take before construction can start?
Timing depends on how quickly plans, the builder contract and the appraisal come together. Starting the conversation early, even while plans are in draft, keeps the schedule on track.
Keep Exploring
Related resources
Let's Talk
Questions about construction-to-permanent home loans?
Send a quick note and Sterling Smith will reply within two business hours (Mon–Fri, 9am–5pm CT). Prefer to talk now? Call or text 931-205-9873.
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