Adam Styer, Texas Mortgage Broker, NMLS #513013

One-Time-Close Construction Loans in Texas — Custom Builds in Austin & Hill Country

For homeowners and self-employed buyers building custom in Travis, Hays, Blanco, Gillespie, and Burnet counties. One closing, one set of fees, one rate locked through construction — then automatic conversion to a permanent 15- or 30-year mortgage.

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Client Reviews | 1,000+ Loans Closed | Licensed in Texas | NMLS #513013

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  1. Adam uses your contact info and loan goal to follow up and gather the missing scenario details.
  2. On that call, he reviews the income, property, or build details and tells you what is worth documenting next.
  3. You get a no-pressure next step, even if a bank already said no.

No judgment. You do not need a perfect tax return to start the conversation.

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NMLS#: 2526130 (Company) · 513013 (Adam Styer)

By Adam Styer, NMLS #513013 · Updated 2026-05-17

A one-time-close construction loan (OTC) is a single-signing construction-to-permanent mortgage. You close once, draw funds through the build, and the loan auto-converts to a permanent 15- or 30-year fixed at certificate of occupancy. No second closing, no second set of fees, no re-underwriting your income or appraisal at conversion. I close OTC construction loans across Texas with a Hill Country focus — custom builds in Travis, Hays, Blanco, Gillespie, Burnet, Llano, and Comal counties from $500K to $5M+.

Most of my custom-build clients are self-employed business owners, partners in professional firms, or recently-liquidated founders. The right OTC structure pairs a strong construction loan with the right income documentation path — bank statement, asset depletion, K-1, or full-doc — so the underwriting is shaped around how the borrower actually earns. That's the difference between "we'll see if you qualify" at a big bank and a clean approval before the foundation is poured.

This page goes deep on what makes OTC the right choice for a Texas custom build, the §50(a)(5) homestead lien rules every Texas borrower must understand, and how the Hill Country market actually prices out for 2026.

One-Time Close vs. Two-Time Close

Construction loans come in two shapes. Picking the wrong one costs real money — in fees, in rate risk, and in the chance the loan blows up between construction completion and the permanent take-out.

One-Time Close (OTC)

Single closing covering both phases. The construction phase is interest-only on the disbursed balance. At certificate of occupancy, the loan modifies into a permanent amortizing mortgage on terms you locked at the front. One application, one underwriting pass, one set of closing costs, one title policy.

What that buys you: protection from rate movement during the build, no requalification at conversion (so a soft income year, a credit event, or an appraisal miss can't kill the take-out), and a single appraisal at the start — not two.

Two-Time Close

A short-term construction loan (interest-only, balloons at completion) followed by a separate permanent mortgage that pays off the construction loan. Two closings, two appraisals, two sets of closing costs — and a full re-underwrite at conversion. If rates rose during your 12-month build, your permanent loan prices at the new market. If your income dropped or your credit slid, your take-out can decline entirely.

Two-time close still makes sense in narrow scenarios — betting rates will fall meaningfully before conversion, or needing maximum flexibility on the permanent product. For most custom builds, OTC wins on math and on risk.

OTC advantage at a glance

  • One closing, one title policy, one set of recording fees
  • Permanent rate locked at construction start (often with float-down option)
  • Single appraisal — one as-completed valuation at the front
  • No re-underwriting at conversion to permanent
  • Interest-only payments on disbursed funds during construction

How an OTC Construction Loan Works, Step by Step

The OTC process looks complicated from the outside. Once you've done it, it's a sequence of well-defined steps. Here's what 12 to 18 months on an OTC actually looks like.

1. Application and Pre-Approval

I underwrite the income, credit, assets, and lot value up front. For a Hill Country custom build, the income piece is often the deciding factor — tax-return income for an S-corp owner or partner rarely supports the loan amount the actual cash flow could carry. We pick the doc path that fits the borrower (full-doc, bank statement, asset depletion, or combined) and price the deal across multiple wholesale construction lenders.

2. Builder Approval and Project Package

The builder submits a project package: license, insurance, financial statements, references, three years of similar builds, and the fixed-price contract for your home. The lender approves the builder before final loan approval. Plans, specs, and the cost breakdown are reviewed against the as-completed appraisal.

3. Appraisal — As-Completed Value

A licensed Texas appraiser values the project as if it were already built, using plans and specs plus the lot. This number drives loan-to-value at conversion. If the as-completed appraisal comes in low, the loan amount is reduced — or the borrower brings cash to bridge the gap. We solve for this before contract signing whenever possible.

4. Single Closing

You sign once. The lien attaches to the land, the construction contract is recorded, and the permanent loan terms are baked in. Rate is locked. Closing costs are paid once.

5. Construction Phase — Milestone Draws

Funds release in milestone-based draws inspected by the lender at each stage — typical stages include foundation, framing and dry-in, mechanicals and rough plumbing, drywall and cabinets, and final completion. Each draw triggers a third-party inspection before funds release. You pay interest only on what's been drawn, not the full loan amount. The builder gets paid as work is verified complete.

6. Conversion to Permanent

At certificate of occupancy, the lender orders a final inspection and recertifies the appraisal. The loan modifies onto its pre-agreed permanent amortization schedule. No new closing, no new title work, no new underwrite. Your first amortizing payment is the next month.

Texas §50(a)(5) — The Construction Lien Rules That Govern Your Build

Texas has the strongest homestead protection in the country. The state constitution treats your primary residence as legally untouchable unless one of a small number of constitutional exceptions applies. Construction is one of those exceptions — and it lives under Article XVI §50(a)(5) of the Texas Constitution.

If you're building or substantially improving your homestead in Texas, your construction loan runs under §50(a)(5), not the home equity rules under §50(a)(6). Out-of-state lenders routinely confuse the two and write files that won't fund in Texas. The four absolute §50(a)(5) requirements are non-negotiable, and missing any of them invalidates the lien.

The four §50(a)(5) requirements for Texas construction liens

  1. Written contract before any work or materials. The construction contract must be executed before the first stake is driven or the first delivery hits the site. No verbal handshake starts, no "we'll paper it later."
  2. Both spouses sign. Spousal joinder is required for homestead, regardless of how the lot is titled. If one spouse refuses to sign, the lien is invalid.
  3. Five-day waiting period. The contract cannot be signed until at least five days after the borrower's loan application, except where a written acknowledgment confirms immediate work is needed for health or safety.
  4. Three-day right of rescission. After signing, the borrower has three days to rescind without penalty.

Contract execution must occur at the lender's office, the title company, or an attorney's office — not the kitchen table.

A fifth practical rule: every contractor, subcontractor, and material supplier in Texas has the right to file a mechanic's lien for non-payment. Title companies require lien waivers from every party before recording the permanent loan. Sloppy waiver collection is one of the most common reasons closings slip at the end of a build.

This is not a place to economize on the loan officer. A Texas-licensed lender who actually closes Texas construction files is the difference between a clean build and a dead one. I've been writing construction loans in Texas since 2017 and I close them under §50(a)(5) every quarter.

Hill Country Custom Home Pricing Reality

Most landing pages dodge real numbers on Hill Country builds. I work this market every month with builders from Spicewood to Fredericksburg, and the price tiers shake out in a predictable range. The numbers below are construction cost per square foot — not all-in cost. Add land, site development, septic and well, finish allowances, and soft costs to land your total.

Tier Construction $/sq ft Typical All-In Profile
Mid-tier custom $180–$220 $700K–$1.2M Builder-grade custom with smart selections
High-end custom $220–$280 $900K–$2.5M Most of my Hill Country pipeline lives here
Premium custom $280–$400+ $1.5M–$5M+ Architect-led, signature finishes, larger acreage
Estate / Fredericksburg-tier $400+ $3M–$15M Vineyard, ranch, or signature compound

Hill Country counties run on a different rhythm than the city of Austin. Permitting alone can take 12 to 18 months between county development permits, septic and well, fire code, and any HOA architectural review. Lot prep is heavier — rock excavation, water lines, and electric service to a remote site can run $50K to $200K+ before the slab is poured. A construction lender who doesn't know this geography will time-out your extended rate lock.

For a $1.5M+ build the borrower is almost always self-employed or equity-compensated. Tax returns reliably under-represent the income. The construction approval is the easy part — the income side is where the deal lives or dies. Bank statement, asset depletion, and combined-doc structures are the most common income paths I run for Hill Country custom borrowers.

Builder Approval Requirements

The builder is half the loan. Lenders underwrite the builder almost as carefully as they underwrite the borrower — because if the builder fails mid-construction, the loan is at risk. Most OTC programs share a common set of builder requirements:

  • Texas-licensed general contractor in good standing, holding any required local registrations.
  • Three or more years of similar-scope completed builds. Custom-home lenders want to see the builder has actually finished homes in your price range and style.
  • Current insurance. Builder's-risk policy on the build site and general liability coverage at lender-set minimums.
  • Financial statements. Most lenders ask for the last two years of business returns or a year-end balance sheet showing the builder has working capital to weather draw delays.
  • References. Three to five previous-client references plus subcontractor and supplier references.
  • Fixed-price contract. Cost-plus and time-and-materials contracts are usually disqualifying. The lender needs a hard number for the as-completed valuation and the funded amount.
  • No owner-builder. Almost no agency or major non-QM OTC program allows the homeowner to be the GC. If you're a builder yourself, you'll need a separate, unrelated GC for the lender's file.

I keep an active rolodex of Hill Country builders who pre-clear the lender package easily. If you haven't picked a builder yet, that's a conversation worth having before you fall in love with a floor plan.

OTC for Self-Employed and Complex-Income Borrowers

Most of my Hill Country custom-build clients are not on a W-2. They're S-corp owners, partners in professional firms, equity-comp executives, recently-liquidated founders, retired with significant brokerage assets, or some combination. Conventional construction lenders force these borrowers through the same tax-return wringer as a W-2 employee — and the math usually fails.

The right approach is to match the loan to how the borrower actually earns:

  • Bank statement OTC: 12 or 24 months of deposits become qualifying income. Works for S-corp owners, 1099 contractors, and small-business owners whose tax returns deflate the real cash flow. See the bank statement loan guide for how the income math runs.
  • Asset depletion OTC: for borrowers whose wealth lives in brokerage and retirement accounts rather than current income. The asset balance becomes a synthetic monthly income figure on the loan application. Detail is on the forthcoming asset depletion mortgage Texas page.
  • K-1 / Form 1084 OTC: partners and S-corp owners with strong K-1 income but heavy depreciation and amortization can qualify via Fannie Form 1084 add-back analysis. Works on agency-eligible loans when the business passes liquidity tests.
  • Combined-doc OTC: stacking W-2 income with bank statement, 1099, or asset depletion to hit qualifying income. Especially common for tech founders with W-2 base plus K-1 distributions or 1099 consulting income.
  • High-net-worth borrowers: the structure is often pledged-asset or securities-backed combined with OTC. See the high-net-worth mortgage page for the wealth-side structures.
  • Business owners: the forthcoming mortgage for business owners in Austin page covers structuring approaches when the borrower has multiple LLCs, holding companies, or layered ownership.

The construction underwriting is the same regardless of the income path. The income documentation is what changes — and that's where most lenders trip and where I spend most of my structuring time.

Where I Close Hill Country OTC Builds

I'm licensed across Texas and most of my custom-build pipeline lives in these seven Hill Country counties. Each has its own permitting rhythm, lot supply, and builder pool.

Travis County

Westlake, Lakeway, Bee Cave, Spicewood, Lago Vista, West Austin. High-end custom and estate builds on Lake Travis frontage and Hill Country acreage. Tightest permitting and the deepest builder pool.

Hays County

Dripping Springs, Wimberley, Driftwood, Buda, Kyle. Hill Country wine country, wedding venues, and large-acreage custom homes. Septic and well are standard outside city limits.

Blanco County

Johnson City, Blanco, Round Mountain. Rolling Hill Country, larger lots, more rural. Custom builds tend to run 5 to 25 acres with bespoke architects.

Gillespie County

Fredericksburg, Stonewall, Harper. Premium tier — Fredericksburg is one of the most expensive build markets in Texas. Vineyard estates and signature compounds; expect $400+/sq ft on the high end.

Burnet County

Marble Falls, Horseshoe Bay, Burnet. Highland Lakes frontage drives premium pricing. Substantial lake-front custom build pipeline; lot prep is heavy in granite country.

Llano County

Llano, Kingsland, Sunrise Beach. Lake LBJ and Lake Buchanan custom homes plus larger Hill Country ranches. Quieter permitting and longer build timelines.

Comal County

New Braunfels, Bulverde, Spring Branch, Canyon Lake. Hybrid Hill Country / South Texas builder pool with strong production-custom market and an active premium tier on Canyon Lake.

Statewide Texas

Outside the Hill Country corridor I close OTC builds across the state — DFW Metroplex, Houston, San Antonio, the Rio Grande Valley, and out to West Texas. Same §50(a)(5) rules everywhere in Texas.

One-Time-Close Construction Loan FAQ — Texas

A one-time-close (OTC) construction loan is a single-closing construction-to-permanent mortgage. You sign once, fund the land and milestone-based construction draws under one note, and the loan automatically converts to a permanent 15- or 30-year mortgage at certificate of occupancy. There is no second closing, no second set of fees, and no requalification at conversion.

A two-time close uses a short-term construction loan that has to be paid off by a separate permanent mortgage at completion. You close twice, pay closing costs twice, and re-underwrite at conversion — which exposes you to rate movement and any change in your income, credit, or appraisal during the build. OTC eliminates that risk. One signing handles everything.

You pick the builder, but the builder has to be approved by the lender. Standard requirements are a licensed Texas general contractor, three or more years of similar builds, current builder's-risk and general liability insurance, financial statements, references, and a fixed-price contract. Most lenders won't approve an owner-builder on a custom home OTC.

§50(a)(5) is the constitutional exception that allows a lien on a Texas homestead to secure improvements. Construction loans on owner-occupied builds run under §50(a)(5), not the §50(a)(6) home equity rules. The four absolute requirements: a written contract before any work or materials, both spouses signing, a five-day waiting period after the loan application, and a three-day right of rescission after signing.

No. Texas homestead law requires both spouses to execute the construction contract and the lien documents on an owner-occupied build, regardless of how the deed is titled. Missing the non-borrowing spouse's signature invalidates the lien and kills the loan. This is the single most common Texas-construction underwriting fail among out-of-state lenders.

Hill Country custom builds typically run $180 to $300 per square foot for the construction itself, not including land. A 3,500-square-foot custom build lands in the $630K to $1.05M range on hard cost alone. Most of my clients land between $900K and $2.5M all-in including lot, site work, and finishes. Premium Fredericksburg-area projects run $1.5M to $15M.

Yes. Most OTC programs offer extended locks of nine, twelve, or fifteen months covering the construction period plus a buffer. Some allow a float-down — if rates drop before conversion, you get one reset. Extension fees apply if the build runs past the lock. The lock structure is one of the biggest reasons to choose OTC over a two-time close.

Most OTC programs hold a contingency reserve of roughly 5% to 10% of hard construction cost (varies by lender) to cover change orders and overruns. Once that reserve is exhausted, additional cost is the borrower's out-of-pocket — the lender will not increase loan size mid-build. Build a generous spec allowance into your fixed-price contract before signing.

Construction funds release in milestone-based draws inspected by the lender — typical milestones include foundation, framing and dry-in, mechanical and rough plumbing, drywall and cabinets, and final completion. Each draw triggers a third-party inspection. You pay interest only on funds disbursed during construction, not the full loan amount.

Yes. I run OTC structures for self-employed borrowers using bank statement income, asset depletion, and combined documentation paths. The construction underwriting is the same — the income side just uses a non-QM program rather than tax returns. Most custom Hill Country builds qualify this way because the borrowers are business owners, partners, or recently-liquidated founders.

I close OTC construction loans statewide in Texas, with a Hill Country focus in Travis, Hays, Blanco, Gillespie, Burnet, Llano, and Comal counties. Common build areas include Austin, Westlake, Lakeway, Dripping Springs, Wimberley, Spicewood, Marble Falls, Horseshoe Bay, Lago Vista, Bee Cave, Driftwood, Fredericksburg, and Johnson City.

To start: government ID, current income documentation (W-2s, tax returns, or bank statements depending on doc type), two months of asset statements, a signed fixed-price construction contract, full plans and specs, builder package (license, insurance, financials, references), executed lot purchase contract or recorded deed if you already own the lot, and an as-completed appraisal — ordered by the lender.

Quick Answers About One-Time-Close Construction Loans

What is a one-time-close construction loan?

A one-time-close construction loan combines the construction financing and permanent mortgage into one closing. It can reduce duplicate closings, but the borrower, builder, plans, budget, lot, and income documentation all need to be reviewed early.

Can self-employed borrowers use construction financing?

Yes, when the income documentation and construction file both fit program guidelines. Adam may compare full-doc, bank statement, asset depletion, K-1, or combined documentation paths for business owners building custom homes.

What should be reviewed before choosing a builder contract?

The loan structure should be reviewed against the lot, construction budget, builder package, appraisal approach, borrower income, assets, reserves, and timeline. A mismatch in any one of those can slow the file.

Reviewed by Adam Styer, NMLS #513013. Adam is licensed in Texas through Mortgage Solutions LP, NMLS #2526130. This page is educational and is not a commitment to lend.

Related Complex-Income Pages

OTC construction is one piece of a custom-build financing stack. These pages cover the income side, the wealth-side structures, and adjacent Hill Country loan options:

Build Your Hill Country Home With the Right Loan Structure

Send me your build budget, lot details, and income picture. I'll structure the OTC and tell you what loan amount and rate to expect — usually same day.

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