Florida one-time-close construction loans: OTC questions answered

What does one-time close mean?

OTC means the construction loan and permanent mortgage close together. With two-close financing, a separate closing establishes the permanent mortgage. One closing does not mean there are no completion conditions: ask about inspections, updated documents, conversion requirements and any fees before choosing a structure.

Think of the project as two phases with different tasks: first, building the home and releasing funds; then, repaying the long-term mortgage after completion and satisfaction of the conversion conditions. Ask the lender to explain the rate arrangements, required documents and payment terms for each phase. When comparing one-close and two-close proposals, request the total estimated costs and the steps required at completion, rather than comparing only the number of closings.

Source: Fannie Mae: single-closing requirements

Can Costa del Sol help with an OTC loan anywhere in Florida?

Yes. Costa del Sol Mortgage Team serves OTC borrowers throughout Florida, not just Pasco County. Share the property address or proposed location so Carlos and Karen can discuss the project in English or Spanish. Statewide service does not mean every property or project qualifies; lender, builder and property requirements still need review.

You can begin the conversation while comparing locations, after finding a lot or when you already have a builder. Tell us which stage you have reached so we can focus on the next decision. For example, a buyer still shopping for land needs a different preparation checklist from someone with completed plans and an existing land loan. Local permitting, site conditions and the selected lender’s requirements will shape the review wherever you build in Florida.

Can I use OTC financing to build a traditional or custom home?

Yes, construction-to-permanent financing can be used for an eligible site-built home, including a custom home built on your lot. Bring the plans, specifications, construction contract, itemized budget and proposed timeline. The lender reviews the borrower, builder and project, including the appraisal of the proposed completed home. Confirm the selected program before committing to construction.

For a custom build, separate the base construction price from allowances, upgrades and work outside the builder’s contract. Ask whether the estimate includes clearing, foundation work, utility connections, driveway, permits and finish selections. Bring a list of items that are still undecided. If you later change the design or materials, ask how the change affects the contract price, appraisal, available funds and completion schedule before authorizing the work.

Source: Fannie Mae: single-closing requirements

Are modular homes the same as manufactured homes for financing?

No. Fannie Mae treats modular housing as site-built housing; HUD-code manufactured homes have separate requirements. Do not rely on the word prefab alone to identify the category. Ask the builder for the construction specifications and have the lender confirm the property classification, foundation requirements and eligibility for its construction program.

This distinction matters when requesting quotes and assembling documents. Ask the home provider to identify the construction standard, what is produced off-site, what work remains at the property and who is responsible for each part. Have the lender review that information early. A floor plan or sales brochure alone may not answer the financing questions. Also clarify how transportation, foundation work, assembly and final inspections appear in the project budget and schedule.

Source: Fannie Mae: modular and other factory-built housing

Can an OTC loan finance a manufactured home?

Potentially. Fannie Mae permits eligible manufactured homes in one-close and two-close construction-to-permanent transactions under specific conditions. That does not establish eligibility with every lender. Confirm the home type, foundation, title treatment, land ownership, installation work and lender acceptance before signing a home or land contract.

Before paying a deposit, ask for an itemized home-and-site proposal rather than relying only on the advertised price of the home. Discuss delivery, foundation, installation, utility connections, permits and any work performed by separate contractors. Ask the lender whether the proposed home, lot arrangement and payment requests fit its program. Dealer or manufacturer payment terms should be reconciled with the lender’s draw process before you sign a binding agreement.

Source: Fannie Mae: construction-to-permanent FAQs

Can I buy land and build with the same loan?

An eligible construction-to-permanent purchase can combine the lot purchase and construction. Bring the proposed land contract and project budget for review. A lot’s asking price alone does not show whether the completed project will qualify; the appraisal, permitted use, site work and total financing all matter.

For example, a lot with an attractive purchase price may still require substantial preparation before construction can begin. Ask the builder to estimate those costs and identify any work excluded from the quote. Coordinate the land contract timeline with the financing review, appraisal and project documentation. Before committing funds, ask your real estate professional about appropriate contract protections and make sure the lender has reviewed the proposed purchase-and-build structure.

Source: Fannie Mae: single-closing requirements

What if I already own the land?

Tell the team when you acquired the lot, how it is titled and whether a loan is secured by it. Existing ownership can change the transaction structure. Ask how the lender will value the land and calculate any usable equity, required cash and payoff of existing liens; do not assume land equity covers every closing expense.

Prepare the deed or ownership information, acquisition details and a current statement for any loan on the land. If the lot was gifted, inherited or is held with another owner, explain that at the start. Ask for a written breakdown showing the land value used in the transaction, existing debt to be paid, construction costs and your remaining cash needs. Owning a lot is useful information for planning, but it does not replace borrower or project qualification.

Source: Fannie Mae: single-closing requirements

How does the builder get paid through construction draws?

A draw releases construction funds under the lender-approved process. For a site-built home, ask how stages such as foundation, framing, mechanical work and completion fit the payment schedule. For modular or manufactured homes, also discuss factory deposits, delivery and installation. Get inspections, invoices, approvals and timing in writing; these examples are not a universal draw schedule.

Before work begins, walk through a sample draw request with the builder and lender: who submits it, what evidence is required, who orders an inspection and when payment can be released. Ask about inspection charges, any funds held until final completion and how disputed or incomplete work is handled. Also agree on a process for change orders. A contractor’s preferred billing schedule should be compared with the lender’s approved process before either party relies on it.

Source: Fannie Mae: single-closing requirements

Does my builder need lender approval?

Confirm the selected lender’s contractor acceptance before committing to the project. Be ready to discuss licensing, insurance, construction experience and references. A builder’s appearance on an earlier list is not confirmation for a new loan. Ask the team to verify current acceptance for the actual property and program.

Introduce the builder early and ask who will coordinate the contractor review. The lender may request business information, evidence of relevant experience, insurance and references; the exact package depends on the program. Clarify whether the builder is also responsible for site preparation or whether separate contractors will participate. Keep loan approval and contractor acceptance as separate checkpoints, and ask what must happen if the builder or scope changes after the initial review.

Does a VA construction builder still need a VA builder ID?

For VA-guaranteed loans on new or proposed construction, VA removed its builder-ID requirement effective March 31, 2025. State and local licensing requirements still matter, and lender contractor review is separate. Specially Adapted Housing grants and Native American Direct Loans have different builder-ID rules. This change alone does not approve a builder or loan.

If a builder or checklist still asks for a VA builder ID, request clarification using VA Circular 26-25-1, linked in the sources below. Ask the lender which current contractor, property and completion documents it requires for your specific transaction. Removing the ID requirement does not remove the need to evaluate the proposed home and construction arrangements, and it should not be treated as an endorsement of a particular contractor.

Source: VA: builder identification update (Circular 26-25-1)

What should I check before building anywhere in Florida?

Start with the parcel and the local authority responsible for permitting. Ask about allowed use, access, flood conditions, site preparation, utilities, well or septic needs, and the requirements for your home type. Confirm the full project budget with the builder and lender before committing. The East Pasco examples below are local resources, not statewide permit instructions.

Build a site checklist before treating a parcel as ready to build. Ask who will verify boundaries and access, which approvals are outstanding, and whether the utility and site-work estimates are written or preliminary. Discuss insurance requirements and construction timing with the appropriate professionals. Keep estimates for the land, home, site work and financing in one budget so an expense does not disappear between separate quotes.

What should I check before buying a lot in East Pasco?

For a proposed home in Dade City, Zephyrhills, San Antonio, Saint Leo or Wesley Chapel, confirm the parcel’s permitting authority and allowed use. Ask about access, site preparation, flood conditions, utilities, well or septic needs and installation requirements. Pasco publishes separate checklists for new homes and mobile-home installation. A mailing address does not establish which jurisdiction approves the work.

Use the linked county checklists as a starting point for questions, then confirm the current requirements with the authority that handles the specific parcel. Ask the builder which documents are already available and which still need to be prepared. If a property uses a private well or septic system, identify the applicable approval process early. The same preparation approach is useful elsewhere in Florida, using the resources for that property’s local jurisdiction.

Source: Pasco County: new home permit checklist · Pasco County: mobile-home installation checklist

Will I make payments during construction?

Ask for a written explanation of construction interest, payment responsibility and any interest reserve. Also ask what happens if work runs late or the budget increases. Include your current housing expenses in your plan. Do not interpret one-time close as a promise of no payments, no additional cash or a guaranteed completion date.

Compare the construction-phase budget with the completed-home budget. During construction, ask how payments may change as funds are disbursed and whether any reserve is included in the financing. For the completed home, review principal and interest, property taxes, homeowners insurance and any other applicable housing charges. Ask how extensions, unused reserves or extra costs are handled. Having those answers in writing helps you plan for both the building period and the move-in period.

How do I start an OTC conversation with Costa del Sol?

Share the property location, whether you own the land, the home type, builder name, estimated project cost and target timeline. Carlos and Karen can discuss your plans in English or Spanish and help identify what needs lender review. Use the secure home-journey portal for financial documents. Program availability and individual eligibility must be confirmed.

You do not need every project detail finalized to start a planning conversation. It helps to organize what you already know and what is still an estimate: land, home design, builder, construction price, savings and desired monthly housing budget. Carlos and Karen can help you identify the questions to resolve next. Keep sensitive income, asset and identification records in the secure portal, and use the general contact form for an initial project summary.

Prepare for your conversation

Write down your comfortable monthly payment, available savings, property plans, and timing. Ask which documents are needed for your income type and use the secure application portal for financial records. For a home purchase, leave room in the budget for maintenance and expenses beyond the mortgage.

Questions worth asking

• What could change my eligibility or costs before closing?
• What cash will I need at closing, and what should remain afterward?
• Which alternative would you compare with this loan, and why?

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