Construction loans • Austin & Texas Hill Country

Construction Loans in Austin, Texas

Can I lock the permanent loan before we break ground?

If you are building, I do not want you in two closings. I look at one-time-close construction-to-permanent loans so the permanent rate is set before groundbreaking, and lot equity can count toward the down payment. Austin, Dripping Springs, Lake Travis, and the Hill Country are the builds I see most.

See My Options Book a 15-Min Call (512) 956-6010

By Adam Styer, Senior Loan Officer • NMLS #513013 • Company NMLS #2072896

Close Structure

One-Time Close

Single closing eliminates duplicative closing fees

Lot Equity

100% Equity Credit

Owned land value counts toward your down payment

Build Phase

Interest-Only Draws

Pay interest only on funds disbursed to builder

Permanent Rate

Locked at Close

Converts automatically to 30-year fixed upon completion

What should I know about this option?

What Is a One-Time Close Construction Loan?

A One-Time Close (OTC) construction loan combines the financing for your lot purchase (or lot payoff), the construction budget, and your permanent 30-year mortgage into a single transaction. You sign loan documents once, pay closing costs once, and lock your long-term interest rate before construction starts.

During the build phase (typically 9 to 12 months), you make interest-only payments based solely on the funds disbursed to your builder across structured inspection milestones. Once your Austin home receives its final Certificate of Occupancy, the loan converts automatically into a permanent standard mortgage without requalifying, reappraising, or paying second closing costs.

Common Situations

Who This Program Is Built For

The situations where I open this file first.

Landowners Ready to Build

If you already own a lot in Austin or the Hill Country, your accumulated equity counts directly toward the construction down payment, often requiring $0 out-of-pocket cash.

Custom Home Buyers

Financing contracts with custom licensed general contractors on suburban or acreage homesites across Travis, Hays, and Williamson counties.

Tear-Down / Rebuild Projects

Demolish an aging bungalow in central Austin (Allandale, Crestview, Bouldin) and construct a modern luxury home under one seamless construction loan.

Buyers Avoiding Market Risk

Locking your permanent rate before construction protects your family against interest rate spikes during the 9–12 months it takes to build.

Options & Milestones

Simple Options & 3-Step Process

The versions of this loan I actually use, and how my team and I move a file.

Conventional OTC Construction

Conforming construction financing up to the $832,750 baseline limit. Requires as little as 5% to 10% equity or down payment.

Best for: Conforming build budgets under $832k

Jumbo Custom Construction

Luxury custom home builds up to $2.5M–$3M+ in Westlake, Lake Travis, and Barton Creek with flexible draw management.

Best for: High-value luxury custom builds

5-Stage Builder Draw Schedule

Structured disbursements (Foundation, Framing, Rough-In, Drywall/Trim, Final Completion) backed by independent third-party site inspections.

Best for: Controlled risk for builder & borrower

Builder & Plan Review

I review the builder, the contract, the plans, and the timeline before I tell you a one-time close will work.

One-Time Closing

Your loan closes, long-term interest rate is locked, and construction funds are placed into an escrow draw account.

Draws & Final Conversion

Builder receives draws as milestones pass inspection. Upon Certificate of Occupancy, the loan auto-converts to your permanent 30-year fixed mortgage.

Illustrative Scenario

In Action: A Clear Scenario

A transparent look at real-world numbers, underwriting parameters, and successful funding.

Illustrative Case • Custom Hill Country Build Dripping Springs, Texas

Dripping Springs Custom Home — $950,000 Project with Lot Equity

The Situation: An Austin family purchased a 1.5-acre lot in Dripping Springs two years ago for $180,000, paying it down to an $80,000 balance. The land was recently appraised at $250,000, giving them $170,000 in accumulated lot equity. They signed a $700,000 build contract with a local custom builder.

The Challenge: A local bank required two separate closings: a temporary construction loan at prime-plus floating rates, followed by a refinance into a 30-year mortgage after completion, totaling over $18,000 in duplicate closing costs.

The Wholesale Solution: Adam arranged a One-Time Close construction loan. Total project value was $950,000 ($250k lot + $700k build). The $170,000 lot equity covered the entire 18% down payment requirement ($0 cash out of pocket). They paid interest only during the 11-month build, and the loan converted automatically into a low 30-year fixed rate upon final inspection.

Disclosure: Illustrative scenario based on composite borrower profile. Actual interest rates, loan limits, and qualification guidelines depend on credit profile, property appraisal, and lender criteria.

Supporting Research & Worksheets

Explore the Details

In-depth underwriting guidelines, loan matrices, and interactive tools in our specialist resources.

Texas One-Time Close Construction Loan Guide Read In-Depth Guide →

Detailed guide covering contractor vetting, draw schedules, and contingency reserves.

Construction Loan Scenario Review Worksheet Submit Scenario →

Submit your lot details and builder estimate for a customized build budget review.

Buy Before You Sell Austin Strategy Explore Move Options →

How to finance your next home build before putting your current house on the market.

Mortgage Payment & Draw Calculator Calculate Payment →

Model monthly interest-only payments during the construction period and permanent payments after conversion.

Clear Answers

Frequently Asked Questions

Straightforward answers to the questions Central Texas borrowers ask most.

What is the difference between a one-time close and a two-time close construction loan?

A two-time close means taking out a short-term construction loan, paying closing fees, and then taking out a second permanent mortgage with a second set of fees once the home is finished. A one-time close combines both into a single transaction and sets the long-term rate before construction starts, so you are not paying a second set of closing costs.

Can I use my land equity as my down payment?

Yes. If you already own your lot, the appraised equity in your land can be credited directly toward the down payment required for the construction loan. In many cases, this completely eliminates the need for any cash down payment.

What are the builder requirements for a construction loan?

Your general contractor must be a licensed, insured builder with demonstrated financial stability and a track record of completing similar residential projects. I review the builder before we close.

How do construction draw disbursements work?

Funds are released in 4 to 6 stages as specific milestones are reached (e.g., foundation poured, framing completed, drywall installed). An independent inspector visits the job site before each draw is wired to the builder.

What happens if construction takes longer than expected?

The one-time-close loans I use are written for 12 to 18 months of construction, with room to extend if weather or materials run long.

How I work • I compare lenders before I recommend one • Pricing without a retail bank markup • Clear communication and the conditions list up front • You work with me and my team

Scenario review

Can this build close once?

Tell me the price, the timeline, and what you are trying to do. I will tell you whether this loan fits. This is a file review, not a credit pull.

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