Building Your Dream Home? Here's How a Two-Time Close Construction Loan Works

If you're picturing a home that doesn't exist yet, one built exactly to your family's needs, on the lot you've had your eye on, you're probably also picturing a stack of confusing financing questions. Do you need one loan or two? What happens to your rate while the home is being built? Can you even get a mortgage on a house that isn't finished?

At TLP Mortgage, we have our Two-Time Close Construction Loan program to answer exactly those questions, with a process that's flexible during the build and predictable once you move in.

WHAT IS A TWO-TIME CLOSE CONSTRUCTION LOAN?

A two-time close construction loan is exactly what it sounds like: two separate closings, one loan journey. The first closing funds the construction of your home. The second closing, once the build is complete, converts that financing into your permanent mortgage.

This two-step structure is what gives the program its flexibility. Instead of locking in a permanent rate on day one of construction, you have room to watch the market and lock in later, closer to move-in day, when your permanent loan terms actually take effect.

Closing #1: Construction Financing

Your first closing puts your construction funds in place. During the 12-month build term, you make interest-only payments, so you're not carrying a full mortgage payment while also potentially covering rent or an existing house payment.

These funds can cover the construction itself, and if you don't already own your lot free and clear, they can also cover the lot purchase or payoff of an existing lot loan.

Closing #2: Permanent Financing

As your home nears completion, your construction financing transitions into a permanent mortgage. Because you aren't locked into a rate from day one, you have the flexibility to lock it in once you're closer to that second closing, giving you a clearer read on where rates stand right as your loan converts.

From there, you'll choose the permanent loan that fits you best: Conventional, FHA, or VA.

WHY BUYERS CHOOSE THIS PROGRAM

• Flexibility during the build, you're not locked into permanent terms before your home is even finished.

• Interest-only payments for the 12-month construction term keep your cash flow manageable while you build.

• Financing up to 95% and credit scores starting at 660 open the door to more buyers who want to build rather than buy resale.

• One consistent lending team from groundbreaking to move-in, so you're never re-explaining your situation to a new lender.

• A choice of conventional, FHA, or VA permanent financing once construction wraps.

IS THIS PROGRAM RIGHT FOR YOU?

A Two-Time Close Construction Loan tends to be the right fit for buyers who already have a lot (or are close to finding one), want more say in the design and finish-out of their home than resale inventory allows, and would rather keep their financing options open than commit to a permanent rate before the home is even framed.

If that sounds like where you are, our team can walk you through what your specific numbers could look like, from construction budget to your eventual permanent payment.build: