Construction Loan: Home Builder Constructs Custom $925K Primary Residence with Single-Close Financing

Brian K., a 51-year-old custom home builder in Fort Lauderdale, had spent 26 years constructing high-end residential properties for affluent clients throughout South Florida. After building dozens of beautiful homes for others, Brian and his wife decided it was time to build their own dream home—a custom 4,200-square-foot residence designed specifically for their family’s needs, lifestyle, and retirement vision. As an established homeowner (Step 3 in his financial journey) transitioning to building wealth through smart real estate decisions, Brian owned a desirable building lot in Plantation valued at $185,000 and had detailed construction plans for a home with an estimated completion value of $925,000.

Brian earned approximately $215,000 annually from his construction business managing custom home projects. He had excellent credit, substantial savings, and deep expertise in construction costs, timelines, and quality management. His business track record demonstrated consistent project completion on time and on budget—exactly the kind of borrower construction lenders seek.

However, when Brian approached traditional lenders about financing his custom home build, he discovered that construction financing was significantly more complex than traditional home purchase mortgages. Many lenders offered two-loan structures requiring separate closings—one loan for construction and a second refinance when the home was complete. Others had stringent draw schedules, required significant reserves, or wouldn’t work with owner-builders even when the owner was a licensed contractor.

Facing similar challenges? Schedule a call to explore your options.

Why Was a Licensed Contractor Struggling to Finance His Own Custom Home Build?

Brian approached four different lenders seeking construction financing for his custom home. He had a 738 credit score, strong income from his construction business, owned the building lot free and clear, had detailed architectural plans, and possessed 26 years of experience managing custom home projects. He understood construction costs intimately and had relationships with subcontractors who would deliver quality work on schedule.

Each lender presented different challenges that complicated his financing plans.

The first lender offered a traditional two-loan structure: a construction loan during the 10-month build period, then a separate refinance into a permanent mortgage when construction completed. This meant Brian would pay closing costs twice, go through underwriting twice, and face interest rate risk—if rates rose during construction, his permanent financing costs would increase significantly.

The second lender offered a construction-to-permanent loan but required Brian to use their approved general contractor rather than serving as owner-builder himself. Despite being a licensed contractor with decades of experience, the lender’s rigid guidelines wouldn’t accommodate owner-builder situations, even for qualified professionals like Brian.

The third lender offered construction financing but required extensive reserves—18 months of housing expenses—and a draw schedule so restrictive it would create cash flow problems during construction. Their fixed draw schedule didn’t align with how custom home building actually progresses, where different phases require different funding amounts at different times.

The fourth lender’s construction loan had competitive terms but wouldn’t convert to permanent financing, meaning Brian would still face a second closing and interest rate risk when construction completed.

“I was frustrated because I know construction inside and out,” Brian explained. “I’ve managed dozens of custom home builds successfully. I understand costs, timelines, quality control, and how to work with subcontractors. I’m not asking to build something I don’t understand—I’m literally doing what I’ve done professionally for 26 years, just for my own family this time. But traditional lenders either wanted me to use their contractor, pay closing costs twice, accept rigid draw schedules that don’t match construction reality, or face interest rate risk during the build.”

The situation felt backwards to Brian. As a professional builder, he represented less risk than a typical homeowner with no construction knowledge. He could manage the project efficiently, maintain quality control, stay on budget, and complete on schedule. Yet traditional construction lenders couldn’t accommodate his expertise or provide the streamlined financing he needed.

“This wasn’t just about one home construction—it was about building the home where we’d live for the next 30 years and eventually retire,” Brian said. “My wife and I had designed every detail specifically for our family and our future. We wanted to be smart stewards of our resources by building exactly what we needed rather than buying someone else’s vision. But I needed financing that recognized my professional qualifications and provided a straightforward path from construction to permanent financing without multiple closings or unnecessary complications.”

Brian needed a construction loan that would transition seamlessly to permanent financing, accommodate his owner-builder status, provide flexible draws matching actual construction progress, and lock in his permanent financing rate upfront to eliminate interest rate risk.

Experiencing similar challenges financing a custom home build? Schedule a call to discuss construction loan solutions.

How Did Brian Discover Construction-to-Permanent Loan Financing?

After his frustrating experiences with traditional lenders, Brian mentioned his situation to another custom home builder at an industry association meeting. His colleague explained how a construction loan with construction-to-permanent financing had allowed him to build his own home with a single closing, flexible draw schedule, and locked permanent rate—exactly what Brian needed.

Brian scheduled a consultation with a loan advisor specializing in construction-to-permanent financing for owner-builders and construction professionals. He wanted to understand the structure, draw process, inspection requirements, and conversion to permanent financing.

The conversation addressed all his concerns. The advisor explained that construction-to-permanent loans (also called “one-time close” or “single-close” construction loans) provide construction financing that automatically converts to permanent financing when the home is complete—requiring only one closing, one set of closing costs, and one underwriting approval. The permanent mortgage rate is locked at the initial closing, eliminating interest rate risk during construction.

“The structure made perfect sense and eliminated all the complications I’d encountered,” Brian said. “One closing instead of two, locking my permanent rate upfront, and a draw schedule we could customize to match actual construction milestones. The advisor explained that because I’m a licensed contractor with a proven track record, they could work with me as owner-builder and structure draws around how custom home construction actually progresses—foundation and framing, rough-ins, drywall and finishes, etc.”

The advisor also explained that construction-to-permanent loans work particularly well for qualified owner-builders, construction professionals, and borrowers working with reputable contractors. Brian’s 26-year track record of successful projects, professional licenses, and industry relationships positioned him as an ideal candidate for this financing structure.

Brian learned the construction-to-permanent loan would provide funds in stages matching construction progress, verified through inspections at each milestone. During construction, he’d pay interest only on funds drawn (not the full loan amount), keeping costs manageable. When construction completed and the home passed final inspection, the loan would automatically convert to permanent financing at the rate locked during the original closing—no second loan, no additional closing costs, no interest rate risk.

What Documentation Was Required for This Construction Loan Approval?

Brian worked with his loan advisor to assemble the required documentation for a construction-to-permanent loan application. Construction loans require more documentation than traditional purchase mortgages because lenders evaluate the construction project, borrower qualifications, and permanent financing viability.

Documentation provided:

Property and construction documentation:

• Complete architectural plans and blueprints for 4,200 sq ft custom home
• Detailed construction budget itemizing all costs by phase
• Builder’s risk insurance quote covering construction period
• Licensed contractor credentials and professional history
• Property survey for building lot in Plantation
• Recent appraisal of owned lot ($185,000 value)
• Estimated completion value appraisal ($925,000)

Borrower financial documentation:

• Tax returns showing $215,000 annual income from construction business
• Business bank statements demonstrating financial stability
• 738 credit score with excellent payment history
• Documentation of owned lot with no mortgage
• Substantial liquid reserves for construction contingencies
• Proof of funds for initial investment and contingencies

Construction management documentation:

• 26-year construction business history
• Portfolio of completed custom home projects
• Subcontractor relationships and credentials
• Project timeline (10-month estimated completion)
• Quality control and inspection plan

The approval process:

1. Initial consultation (Day 1) – Discussed construction-to-permanent structure and owner-builder qualifications
2. Document submission (Days 3-5) – Uploaded architectural plans, construction budget, and financial documentation
3. Construction plan review (Days 6-12) – Lender’s construction expert reviewed plans, budget, and timeline
4. Borrower and builder qualification (Days 13-15) – Verified professional credentials and financial capacity
5. Appraisal coordination (Days 16-18) – Appraiser evaluated lot value and projected completion value
6. Conditional approval (Day 20) – Approved pending final plan clarifications and insurance
7. Final underwriting (Days 21-25) – Verified all conditions satisfied and construction viability
8. Clear to close (Day 28) – Final approval issued with locked permanent rate
9. Closing (Day 35) – Single closing for construction-to-permanent financing
10. Construction period (Months 1-10) – Draws issued per milestone inspections
11. Final inspection (Month 10) – Certificate of occupancy issued
12. Conversion to permanent financing (Month 10) – Automatic conversion, no second closing

The lender approved Brian’s construction-to-permanent loan based on his professional construction expertise, strong financial position, owned lot equity, detailed construction plans, and realistic budget. The single-close structure meant Brian paid closing costs once, locked his permanent mortgage rate immediately, and had a clear path from construction start to permanent financing without additional approvals or closings.

“The process was thorough but made sense for construction lending,” Brian said. “The lender’s construction reviewer evaluated my plans, budget, and timeline professionally—asking good questions about material choices, subcontractor scheduling, and quality control. They weren’t being difficult; they were doing proper due diligence to ensure the project was viable and I had the expertise to complete it successfully. Once they verified my professional credentials and construction plan, approval moved forward smoothly.”

The entire approval process took 35 days from initial application to closing, which aligned with Brian’s timeline for breaking ground. During the 10-month construction period, the lender conducted inspections at key milestones—foundation, framing, rough-ins, drywall, finishes—before releasing each draw. When the home passed final inspection and received certificate of occupancy, the construction loan automatically converted to permanent financing at the rate locked 10 months earlier.

Ready to explore construction financing? Submit a purchase inquiry to discuss your custom home project.

What Were the Final Results of This Construction Loan?

Brian successfully constructed his custom home using the construction-to-permanent loan, completing the project on time and on budget. The single-close financing structure eliminated complications, locked in favorable permanent financing terms, and provided the flexibility he needed as an experienced builder.

Final construction loan structure:

• Construction loan amount: Based on estimated completion value and construction costs
• Owned lot value: $185,000 (no loan against lot)
• Estimated completion value: $925,000
• Project timeline: 10 months from groundbreaking to certificate of occupancy
• Permanent financing: Automatic conversion at rate locked during initial closing
• Draw structure: Milestone-based with inspections (foundation, framing, rough-ins, finishes, completion)
• Interest during construction: Interest-only on drawn funds, not full loan amount

Construction timeline:

• Month 1: Groundbreaking and foundation (first draw after inspection)
• Months 2-3: Framing, roof, windows (second draw after framing inspection)
• Months 4-5: Rough plumbing, electrical, HVAC (third draw after rough-in inspection)
• Months 6-7: Drywall, insulation, interior finishes (fourth draw after drywall inspection)
• Months 8-9: Flooring, cabinets, fixtures, painting (fifth draw after substantial completion)
• Month 10: Final details, landscaping, final inspection (final draw after certificate of occupancy)
• Month 10: Automatic conversion to permanent financing, no second closing required

Strategic outcome:

• Dream home completed: 4,200 sq ft custom residence built to exact specifications
• Single closing: Paid closing costs once, not twice
• Rate protection: Permanent rate locked 10 months before conversion
• Professional autonomy: Managed construction as owner-builder using own expertise
• On-time completion: Finished in 10 months as projected
• On-budget execution: Completed within construction budget
• Equity position: Substantial equity from owned lot plus construction completion

Brian and his wife moved into their completed custom home exactly 10 months after breaking ground. The home included every feature they’d planned—an open-concept great room perfect for entertaining family, a gourmet kitchen designed for serious cooking, a home office for managing Brian’s construction business, a primary suite with spa-like bathroom, and outdoor living spaces for Florida’s lifestyle. The construction-to-permanent loan had converted automatically to permanent financing without requiring a second application, second closing, or exposure to interest rate changes.

“The construction-to-permanent loan allowed us to build exactly the home we wanted without financial complications,” Brian explained. “We locked our permanent mortgage rate during the initial closing, so even though rates fluctuated during the 10-month construction period, our financing stayed locked at the original terms. We saved thousands by only paying one set of closing costs instead of closing twice. And I had the professional autonomy to manage construction the way I’ve done successfully for 26 years, ensuring quality and staying on budget.”

Brian views this home as more than just a residence—it’s a long-term wealth-building asset and the place where he and his wife will retire. By building custom rather than buying existing, they created exactly what they needed without compromising. The home’s $925,000 value represents substantial equity that could eventually be leveraged for other investments if desired, but more importantly, it provides the lifestyle and functionality they’ll enjoy for decades.

“This isn’t just about one custom home—it’s about being smart stewards of our resources and making wise decisions for our family’s future,” Brian added. “We built exactly what we needed, managed costs professionally, and used smart financing to make it happen efficiently. This home will serve us through retirement and beyond. Eventually, it will be part of the wealth we pass to our children. That’s the kind of thoughtful, long-term decision-making that builds lasting family wealth—not flashy or complicated, just wise stewardship of the resources we’ve been blessed with.”

Ready to start your custom home project? Get approved or schedule a call to discuss construction financing options.

When Should Homeowners Consider Construction Loans?

Construction loans serve specific purposes for those building custom homes, renovating extensively, or creating exactly what they want rather than settling for existing inventory.

Ideal construction loan scenarios:

• Building custom primary residence on owned or purchased lot
• Major renovations requiring construction financing (not just home equity)
• Owner-builders with construction expertise and professional licenses
• Working with reputable contractors on spec home or custom build
• Creating specific features or layouts not available in existing homes
• Building in areas where existing inventory doesn’t meet needs

Construction-to-permanent loan advantages:

• Single closing (one set of closing costs, not two)
• Locked permanent rate during construction (eliminates rate risk)
• Streamlined conversion to permanent financing (no second underwriting)
• Interest-only payments during construction on drawn funds
• Flexible draws matching construction progress
• No separate construction loan and refinance process

Important considerations:

• Requires detailed construction plans and realistic budget
• Lender inspections at each draw milestone
• Owner-builders need professional credentials and experience
• Construction completion timeline affects planning
• Budget contingencies important for unexpected costs

Have questions about construction loan structure and requirements? Schedule a call with a loan advisor today.

Alternative Financing Options for Homeowners and Builders

If a construction loan isn’t the perfect fit for your situation, consider these alternative financing options:

• Home Equity Loan – For major renovations on existing homes using equity as collateral
• HELOC – Flexible line of credit for renovation projects with multiple phases
• Bank Statement Loan – For self-employed builders/contractors with strong deposit history
• 1099 Loan – For independent contractors with 1099 income and business deductions
• Jumbo Loan – For high-value custom home construction exceeding conventional limits
• Profit and Loss Mortgage – For business owners who can provide CPA-prepared financial statements

Explore all loan programs to find your best option.

Want to assess your complete financial picture and explore your wealth-building path? Take our discovery quiz to clarify your goals and next steps.

Helpful Construction Loan Resources

Learn more about this loan program:

• Complete Construction Loan Guide – Detailed requirements, draw process, and conversion to permanent financing
• Construction Loan Calculator – Estimate construction costs and permanent financing scenarios

Similar success stories:

• Browse all case studies by your journey stage and home building goals

External authoritative resources:

• CFPB Mortgage Shopping Resources – Consumer protection information for homebuyers
• HUD Construction Lending Guidelines – Federal housing administration guidance
• National Association of Home Builders – Industry resources for custom home building
• ICC Building Codes – International Code Council building standards and regulations

Ready to take action?

• Apply online – Start your construction loan application today
• Schedule a consultation – Discuss your specific custom home plans and financing needs
• Take the discovery quiz – Deep dive into your life, wealth, and purpose goals to clarify your financial path

Need local expertise? Get introduced to trusted partners including architects, contractors, and custom home builders in your area.

Primary keyword phrase: construction loan