Construction to Permanent Loan in Texas

Building a custom home in Texas? A construction to permanent loan allows you to finance the building process and lock in long-term fixed rates with one loan. Here’s what Texas home buyers should know about construction to permanent mortgages.

What is a Construction to Permanent Loan?

A construction to permanent loan combines the construction loan and permanent mortgage into a single loan. The loan has two phases:

  • Construction Phase: The lender disburses payments to the builder during construction. The borrower usually makes interest-only payments during this time.
  • Permanent Phase: Once construction is complete, the loan converts to a fixed-rate permanent mortgage. The borrower then makes principal and interest payments.

Construction to permanent loans eliminate the need for two separate loans and closings. This streamlined process makes it easier and more affordable to finance new home construction.

Benefits of a C2P Loan in Texas

Construction to permanent loans offer several advantages for Texas home buyers:

  • One closing: Avoid two sets of closing costs by rolling construction financing and permanent mortgage into one loan.
  • Interest-only payments: Make lower payments during the construction phase when you’re not yet living in the home.
  • Fixed interest rates: Lock in a low, fixed rate on the permanent mortgage portion early.
  • Customization: Make design selections for your custom-built home before construction starts.
  • Streamlined process: Have one lender handle the entire building and mortgage process from start to finish.
  • Builder relationships: Some lenders have existing relationships with home builders to streamline coordination.

Applying for a C2P Loan in Texas

The process of getting a construction to permanent loan involves a few extra steps compared to a standard mortgage:

  • Start with getting pre-approved to show builders proof of your financing ability.
  • Next, work with a builder to design plans and determine the final construction budget.
  • Your lender will order appraisals throughout construction to account for the home’s growing value.
  • Permanent financing terms cannot be finalized until construction is complete.
  • Finally, the construction portion will convert to a fixed-rate mortgage once your home is move-in ready.

Requirements vary by lender, but you’ll generally need a down payment of 10-20%, a credit score around 640, and stable income to qualify.

Finding the Best C2P Lender in Texas

Many national and local lenders offer construction to permanent loans in Texas. Compare multiple lenders to find the best rates and terms:

  • National banks like Chase and Bank of America
  • Mortgage lenders like loanDepot and New American Funding
  • Credit unions like Navy Federal Credit Union
  • Community banks like Frost Bank and Icon Bank
  • Online lenders like LendingTree and loanDepot

Work with an experienced loan officer who can explain costs, timelines, and requirements to ensure this financing option fits your home building plans in Texas.

With a construction to permanent loan, Texas home buyers can conveniently finance the building process with one loan at competitive rates. Make sure to shop around, choose a reputable builder, and understand timelines to make the most of this streamlined construction financing option.


Can I get a loan to build a house in Texas?

Qualify for a Construction Loan If you live in Texas, you can apply right away without having to first pre-qualify. Finding a qualified builder is the first step in securing funds for your dream home, so start reading reviews and consulting regional experts.

Can you use land as a down payment for a construction loan in Texas?

I can use my land as equity for a construction loan, so the short answer is yes. You can probably use your equity in the land toward the purchase of a new home if you own your land free and clear (with no mortgage or liens).

How does a construction loan work in Texas?

Construction loans are frequently designed to cover the entire project cost, including the land and building the home. You are responsible for another down payment and set of closing costs to close on this loan.

Does Texas lending do construction loans?

Construction Loans with Our Specialized Team — Texas Lending Partners. We close over $150M in Build on Your Lot Construction Loans, so you’ve come to the right place. Each builder and borrower we work with has a unique situation or financial objective.