Build your home in Texas with a single closing that covers both construction and your permanent mortgage. Lock your rate at the start, pay interest-only during the build, and convert automatically at completion — no second closing, no second set of fees, no re-qualification risk.
A One-Time Close (OTC) construction loan — also called single-close or construction-to-permanent — wraps your construction financing and your permanent mortgage into one loan that closes a single time. You lock your permanent interest rate before the build begins, pay interest only on funds drawn during construction, and the loan converts automatically to a standard 30-year mortgage when the home is complete and passes final inspection. No second application, no second set of closing costs, and no risk that rates rise or your qualification changes mid-build.
A two-close construction loan means a second round of title, appraisal, and lender fees — often several thousand dollars — plus the risk that interest rates climb or your income/credit changes before you can convert. OTC removes both the duplicate cost and the re-qualification risk.
Lot equity can count toward your down payment. If you own land in Conroe, Fulshear, or anywhere in Texas — even with a lien — that equity can reduce or cover your cash to close. The existing lien is paid off and rolled into the new note.
At closing, the loan funds the lot (if you don't already own it) and establishes a construction escrow. As the builder completes work, the lender releases money in stages called "draws," verified by inspection. You pay interest only on the amount drawn so far — so early in the build, when little is drawn, your payment is small. When the home is finished and passes final inspection, the loan converts to your permanent mortgage at the rate you locked up front, and you begin normal principal-and-interest payments.
You are not making full P&I payments while the house goes up — only interest on funds drawn. As milestones complete and more is disbursed, the interest payment gradually increases. Full P&I begins only after conversion.
Your permanent rate is set before construction begins, so a rising-rate market during a 6–12 month build doesn't hurt you. This certainty is the single biggest reason buyers choose OTC over a two-time close.
OTC qualifying is based on three pillars — credit, income, and assets — much like a standard purchase. The exact thresholds depend on which program (Conventional, FHA, or VA) you build under.
The lender reviews and approves your builder, plans, and budget — not just you. Bring a reputable, licensed builder with a clear scope and realistic budget and approval goes much smoother. No approved builder yet? I can point you toward builders experienced with OTC financing.
Construction funds aren't handed over all at once. They're held in escrow and released to your builder in scheduled "draws" as verified milestones are completed. A typical build might have 4–6 draws.
Released as work completes
Inspection protects you
Before each release, an inspection confirms the work was actually completed. The lender then disburses that draw directly to the builder. This staged process protects you — the builder gets paid for completed work, not promises, and you only pay interest on funds released so far.
Builds run into surprises — material price changes, unforeseen site conditions. Lenders typically require a contingency reserve (commonly ~5–10% of construction cost) so overruns don't stall your project. I'll help you size this realistically.
Simplified estimate based on combined lot + build cost; actual loan uses the lesser of as-completed appraised value or total cost. For illustration only — not an offer or approval. Excludes taxes, insurance, HOA, and mortgage insurance.
As a NEXA broker, I shop wholesale construction investors so you get competitive single-close terms instead of one bank's narrow program. You work with me — not the lender directly.
Texas has unique constitutional lien rules for construction. On a homestead, the construction contract generally must be signed by both spouses, executed at the title company or an attorney's office, and signed at least one day after the contract date with a 3-day right of rescission. These protect homeowners but mean paperwork must be done precisely — I coordinate this with your title company.
| Feature | One-Time Close | Two-Time Close |
|---|---|---|
| Number of closings | One | Two |
| Closing-cost sets | One | Two |
| Rate locked | At start of build | At conversion |
| Re-qualify at end | No | Yes |
| Rate-rise risk during build | None (locked) | Exposed |
| Construction-term flexibility | Standardized | Higher |
| Best for | Most buyers; rate certainty | Complex/custom builds |
OTC suits most buyers who want certainty and lower total cost. A two-time close can make sense for complex, high-cost custom builds needing separate construction terms — see the Construction-to-Permanent page.
Let's lock your rate and close once — the simplest path from lot to keys, in Conventional, FHA, or VA. No cost, no obligation. English & Turkish.