Texas Property Lending

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What is a One Time Close (OTC)
New Home Construction Loan?

A One Time Close (OTC) New Home Construction Loan can enable borrowers to close on both the construction loan and permanent long-term financing simultaneously. As a result, both a builder and a borrower have added security. Before the job starts, the money to complete the project is in escrow, and the borrower knows the long-term interest rate. There are four potential options: (A) a Conventional OTC Loan, (B) a VA OTC Loan, (C) an FHA OTC Loan, or (D) a USDA OTC Loan.

Home Construction Loan Quick Facts

Projected rental income on current residence CANNOT be used for qualifying purposes.

Tear down and rebuilds ALLOWED (including removal and replacement of existing manufactured home).

Land value cannot exceed 38% of the total new home appraised value.

Self-Builds, Self-Help, Sweat Equity not permitted.

Only one fixed price turn key contract between one Builder/Dealer and Borrower allowed.

Construction Contract MUST match the most recently approved GSF Cost Calculation Worksheet.

Requires proof of land ownership or executed land purchase contract.

Requires Evidence of General Liability Insurance with minimum coverage amount of $1,000,000 per occurrence.

Build term is up to 12 months. Exceptions vary.

Requirements of Each Home Construction Loan

Step 1

Get your loan Approved

Fill out a Loan application and Get Qualified
for a New Home Construction OTC Loan.
This can be the easiest step.

Step 2

Finalize your Plans

Consult with your own Contractors,
Architects, Engineers, and/or other
specialists to create a final set of plans.

Step 3

Choose your Contractor

You choose a General Contractor
who at least meets MINIMUM
requirements.

Step 4

Pass Appraisal Test

An Appraiser must verify that the cost to build your
new home is at least equal to a fair market
value.

Step 5

Close your Loan

After closing at a Title Company,
the money used to build your home is
sent to an Escrow Account or set aside
by the lender for Construction Draws.

Step 6

Monitor Progress

After your Contractor completes a phase,
the Lender sends an inspector to verify the
work is done before payment is sent.

Step 7

Final Contractor Payment

Once complete, the Lender has a
final inspection to authorize
a final payment.

Step 8

Start monthly Payments

After construction is complete, the loan will be
modified into a permanent loan, and that’s when you
begin making principal and interest payments.

Find Rate

What is your BEST Loan Option?

CONVENTIONAL

A Mortgage for those at or above a 620 FICO score.

VA

A Mortgage only for US Veterans and their spouses.

FHA

A Mortgage that helps buyers with challenges to gain and maintain homeownership.

JUMBO

Any Mortagage that is larger than a conventional Mortgage Limit.

USDA

A Mortgage that helps rural residents gain and maintain homeownership.

Foreign National

A Mortgage for Non US Citizens who hold a qualifying US Visa.

RENOVATION

A Mortgage used to renovate a property.

CONSTRUCTION

A Mortgage used to build a new property.

ITIN MORTGAGE

A Mortgage for those who do not hold a Legal Status.

COMMERCIAL

A Mortgage for property that is used for business purposes.