Unlocking Construction Loans Your Ultimate Guide for one and two time close construction Loans

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Here are details on all of our Programs
https://www.woodlandsmortgagebank.com/construction-loan-programs-available/

Loan Limits for All of Our One and two time close Construction loans
https://www.woodlandsmortgagebank.com/current-loan-limits-for-ground-up-construction/

Co-Borrowers for one and two time Close Construction Loans
https://www.woodlandsmortgagebank.com/co-borrowers-one-time-close-construction-loan/

Navigating the world of construction financing can be complex, which is why we’ve compiled answers to frequently asked questions about construction loans to help borrowers understand their options. At our institution, a federally chartered bank with over 20 years of experience since 2004, we specialize in construction loans across 46 states for building and 48 states for purchase/refinance, offering tailored solutions like one-time and two-time close loans.
One common inquiry among the frequently asked questions about construction loans is whether we charge a contingency fee. Unlike some lenders, we don’t require this fee at closing, keeping costs low for borrowers opting for low or no down payment loans. Builders may include a contingency upcharge for unexpected costs, but if they don’t, any overages are negotiated directly between you and the builder via a change order—keeping your loan terms intact.
Another popular question: how does owning and selling an existing home affect qualification? Yes, it impacts your debt-to-income ratio, as you must afford payments for both properties during construction per program guidelines. For those asking about paying off a one-time close loan early (e.g., using proceeds from a home sale), note there’s a bank penalty. To avoid this, our two-time close loan is a penalty-free alternative, a key detail in frequently asked questions about construction loans.
We offer flexibility—lending on single-family primary or second homes (not duplexes or investment properties) in amounts aligned with our program maximums, with a minimum credit score outlined online. You can buy land simultaneously with a construction-to-permanent loan or use owned land equity toward your down payment (rules vary by loan type: 1 day for conventional, 6 months for FHA, 1 year for VA). Land gifting from family is allowed across all loan types, and VA/conventional loans permit family builders or land purchases, though FHA’s “Identity of Interest” rule may raise the down payment to 15%.
The frequently asked questions about construction loans also cover loan types and processes. A one-time close combines construction and permanent financing, while a two-time close separates them—details are online. Builder approval takes about 5 business days, and closing a construction-to-permanent loan typically spans 45-60 days, though clean files can close faster. Builders get draws twice monthly, wired within 72 hours, and construction must finish within 12 months, with limited extensions available.
Other queries include modular homes (yes, under FHA if off-frame), acreage limits (10 acres standard, more case-by-case), and adding accessory dwelling units (ADUs) like guest houses (375-1,000 sq ft). Demolition costs for existing structures can be included if within appraised value. Appraisals below approved amounts require the builder to lower costs or you to cover the difference. Plans and specs are required from builders for all loans, and while you can suggest a title company, the builder typically chooses.