Program highlights
- One-time or two-time close construction (Conv, FHA, VA, USDA)
- FHA 203(k) standard and limited renovation
- Renovation (all agency)
- Escrow holdback
- Barndominium
- Vacant land/lots
- Manufactured (singlewide + doublewide, primary or investment)
What is a construction loan?
A construction loan finances the building of a new home, paying the builder in stages as work is completed, then converting to or being replaced by a permanent mortgage. A renovation loan does something similar for an existing home, rolling the cost of repairs or upgrades into the mortgage.
One-time vs. two-time close construction
We offer both structures on agency loans: conventional, FHA, VA, and USDA.
- One-time close: a single loan and a single closing cover construction and the permanent mortgage. You qualify once, sign once, and pay closing costs once. When the home is finished, the loan converts to a regular mortgage.
- Two-time close: a short-term construction loan funds the build, then a separate permanent mortgage pays it off at completion. This can offer more flexibility on builder and project type, but it means two closings and qualifying again at the end.
During construction, funds are released in draws as the builder hits milestones, usually confirmed by an inspection. Builders typically need to be approved and licensed, and plans, specs, and a detailed budget are required up front.
Renovation loans
Renovation financing lets you buy a home and fix it up with one loan, based on the value after improvements.
- FHA 203(k) limited: for lighter, non-structural projects like flooring, paint, cabinets, appliances, or a roof.
- FHA 203(k) standard: for larger projects, including structural work and room additions, typically with a consultant overseeing the work.
- Agency renovation loans: conventional, VA, and USDA renovation options for eligible borrowers and properties.
Escrow holdbacks
An escrow holdback lets you close on a home when a few items cannot be finished in time, such as landscaping, a driveway, or exterior paint after weather delays. Funds are held at closing and released when the work is done. This keeps a closing on schedule without waiting on the last details.
Who it fits
These loans fit buyers building on their own land, buyers who find the right location but the wrong kitchen, and homeowners who would rather renovate than move. They also fit buyers of barndominiums, manufactured homes, and homes on acreage, which we cover in more detail on our unique property page.
What you need to apply
- Standard income and asset documents
- Builder or contractor information, license, and insurance
- Plans, specs, and a detailed cost breakdown or bids
- Land information, if you already own the lot
- For 203(k): a scope of work and contractor bids
How we help in Austin
Central Texas has plenty of rural lots, Hill Country acreage, and older homes in neighborhoods like Allandale, Crestview, and Brentwood that are ripe for updates. We help you and your builder understand the draw process and timeline before you start, and we coordinate with the title company and inspector at each stage. We offer construction and renovation financing in our 12 licensed states.
Additional terms and conditions apply. Not all loan types are compatible with this product. Subject to underwriting conditions. Not a promise to make a loan. All borrowers must qualify.
Construction and Renovation Loans: common questions
What is the difference between a one-time and two-time close construction loan?
A one-time close combines the construction loan and permanent mortgage into one loan with one closing, so you qualify once and pay one set of closing costs. A two-time close uses a separate construction loan, then a new permanent mortgage when the home is done. Two-time closes can be more flexible, but you close and qualify twice.
Can I use a VA or FHA loan to build a house?
Yes. We offer one-time and two-time close construction on agency loans, including VA, FHA, conventional, and USDA. Each loan type has its own requirements for builders, property type, and down payment. VA and USDA construction can allow little or no down payment for eligible borrowers. We check your builder and plans early so the file is ready to go.
What is an FHA 203(k) loan?
An FHA 203(k) loan lets you buy a home and finance repairs or improvements in one mortgage. The limited 203(k) covers lighter, non-structural work like flooring, paint, or appliances. The standard 203(k) handles bigger projects, including structural repairs and additions, typically with a HUD consultant overseeing the work. Minimum score and other FHA rules apply.
What is an escrow holdback?
An escrow holdback lets you close on a home even though a few items are not finished, such as landscaping, a fence, or exterior work delayed by weather. Money is held back at closing to cover the unfinished work and released once it is complete. It keeps your closing on schedule without leaving the work unfunded. Program rules vary.
Do I need to own the land before I build?
No. Some construction loans can finance the land purchase and the build together. If you already own your lot, the equity in the land can often count toward your down payment. We also offer vacant land and lot financing if you want to buy land now and build later. Tell us where you are in the process and we will map the steps.