The Construction-to-Permanent Loan

You can’t use a standard mortgage to build a custom home, because the home doesn’t exist yet for the bank to lend against. The product that solves this is the construction-to-permanent loan, often called a one-time-close or C-to-P loan. One application, one closing, one set of fees, and it covers both the build and the long-term mortgage.

During construction (9 to 14 months on a typical Sisu build) the loan behaves like a line of credit.

During construction (9 to 14 months on a typical Sisu build) the loan behaves like a line of credit. We pull money in scheduled draws tied to construction milestones: foundation poured, framing complete, dry-in, drywall, finishes, certificate of occupancy. The lender sends an inspector to verify the work before each draw, and then funds get released to pay the trades.

While the home is being built, you only pay interest on the money that’s been drawn so far, not the full loan amount. That keeps the monthly cost low during the construction period, which matters if you’re still paying rent or another mortgage. Once the certificate of occupancy is issued, the loan automatically converts to a standard mortgage at whatever term you selected at closing. There’s no second closing and no additional fees.

Get Pre-Approved Before the First Design Meeting

The single most common mistake we see is families designing a home before they know what they can actually finance. Six months later the bids come back $200K over what the bank will lend, and the project either dies or gets value-engineered until nobody recognizes it.

Get pre-approved before you sit down with a designer. The lender will review income, credit, debts, and assets, and issue a conditional commitment for a specific loan amount. That number becomes the working budget for the entire project, including land, soft costs, contingency, and construction. Pair this with our breakdown of what custom homes actually cost in McAllen so you can see whether the home you want fits the loan amount you can get.

What Lenders Need From You and From Us

Construction loans require more documentation than a regular mortgage because the bank is underwriting both you and the project.

From you, the personal package: two years of tax returns, two years of W-2s or 1099s, recent pay stubs, two to three months of bank statements, a current debt schedule, and proof of any other assets you’re using for down payment or reserves.

From the builder, the project package: signed construction contract, full architectural plans, line-item budget, land documentation (deed, title commitment, survey), and proof of the builder’s licensing, bond, and insurance. We package this side ourselves as part of our building process so the lender has everything they need to underwrite the project without going back and forth for weeks.

Pick the Right Lender

Construction loans are a specialty product. A bank that does fifty mortgages a month might do two construction loans a year, and the inexperience shows up in slow draws, picky inspectors, and surprise documentation requests three months in.

For McAllen, Mission, and Edinburg builds, regional banks and local credit unions usually outperform the big national lenders. They have dedicated construction loan officers, faster draw turnaround, and a better feel for the local market. The Consumer Financial Protection Bureau’s homeownership guide is worth reading for general loan rights. Beyond that, an experienced local builder is often the fastest way to find the right lender. We work regularly with the construction lending teams in the RGV and we’re happy to make introductions when families are getting started. That’s part of the value of working with a local custom builder.

It’s More Manageable Than It Looks

Construction financing has more moving parts than a regular mortgage, but the steps are knowable and the timeline is predictable. Get pre-approved before you design, gather the documents above, work with a lender who actually does construction loans on a regular basis, and partner with a builder who can package the project side cleanly. Do those four things and financing won’t be the thing that holds up your build.

If you’re starting to think about a custom build in McAllen, reach out. We’ll walk you through the financing path that fits your situation and introduce you to the right lender before you commit to a design.