Construction loans in Florida: construction-to-permanent financing with one closing and draws paid as you build. Mortgage Broker Douglas Wilkerson explains down payments, draw schedules, builder approval & how to qualify.
A construction loan finances building a home — the lot purchase and the construction costs — and then converts into a normal permanent mortgage when the home is finished. The most common structure is construction-to-permanent (also called a one-time close): you close once, the lender funds the build in staged draws, and when construction is complete the loan rolls into your regular mortgage with no second closing.
In plain English: instead of paying cash for construction and then scrambling for a mortgage at the end, one loan covers the whole journey — land, build, and the permanent mortgage after.
| Feature | One-Time Close (Construction-to-Permanent) | Two-Time Close |
|---|---|---|
| Closings | One — rate locked upfront | Two — construction loan, then separate permanent mortgage |
| Rate risk | Rate set at the start | Exposed to rate changes during the build |
| Closing costs | Paid once | Paid twice |
| Flexibility | Less — terms fixed at closing | More — shop the permanent loan later |
| Availability | Fewer lenders offer it | More widely available |
Most borrowers prefer the one-time close for the locked rate and single set of closing costs — but fewer lenders offer it, which is exactly why a broker with roughly 200 lending partners matters here. If a bank doesn’t do construction-to-permanent, that’s the bank’s limitation, not yours.
You don’t get the construction funds all at once. The lender releases money in draws — typically 4 to 7 of them — tied to completed milestones:
Before each draw, an inspector verifies the work is actually done — the lender only funds completed work. During construction you typically pay interest only on the amount drawn, so early payments are small and grow as the build progresses. A 5% contingency reserve is standard in the budget for overruns — because overruns happen.
Construction lending is paperwork-heavy by nature. Having the builder package organized before you apply saves weeks.
1. You already own the lot. The best position. The lot’s appraised value counts toward your down payment — own a $120,000 lot on a $500,000 total project and you may already meet a 20% requirement before writing a check.
2. You’re buying the lot now. The construction-to-permanent loan can include the lot purchase in the same closing — one transaction, land and build together.
3. Builder-owned lot. Many Northeast Florida builders (especially in St. Johns and Nassau County growth corridors) sell lot-plus-home packages. The construction loan is structured around the builder’s contract price.
Already have a lot loan? It gets paid off at the construction closing and rolled into the new loan.
VA construction loans technically exist — the VA program allows them, with 0% down and no monthly MI like any VA loan. The catch: very few lenders actually offer them. This is a program where a broker’s lender network is the entire ballgame. Eligible veterans and active-duty buyers should absolutely ask — building with 0% down is a massive advantage if the lender exists.
FHA one-time-close construction also exists, with 3.5% down. Same story: limited lender availability, real program. USDA allows new construction in eligible areas too, with its 0%-down structure.
If you assumed construction meant 25% down or nothing, these programs are worth a conversation before you rule yourself out.
During the build: interest-only payments on the drawn balance — small at first, growing as draws fund. You’ll also carry builder’s risk insurance during construction.
At conversion: the loan becomes a standard 30-year (or 15-year) fixed mortgage at the rate you locked. No second closing on a one-time close.
Budget reality: Northeast Florida build costs vary enormously — production-builder homes in St. Johns County vs. custom builds at the Beaches are different universes. Whatever your builder quotes, the lender’s 5% contingency exists because final costs land above the contract more often than below it. Price the contingency in from day one. Considering a fixer-upper instead of a new build? Compare renovation loans first.
Timeline: 6–12 months for most single-family builds; custom homes run longer. Your rate lock and construction period need to cover the realistic timeline, not the optimistic one.
680+ is the typical floor for conventional one-time-close construction; 720+ earns the best terms. VA construction follows VA’s no-minimum-score rule (lender requirements vary), and FHA one-time-close follows FHA’s 580 tier. The program you use matters as much as the score.
Usually 20–25% of the total project cost (land + construction). The big exception: land you already own counts toward it — a free-and-clear lot often covers the requirement by itself. VA construction can go 0% down; FHA one-time-close allows 3.5%.
One-time close (construction-to-permanent): a single closing, rate locked upfront, one set of closing costs. Two-time close: a construction loan first, then a separate permanent mortgage later — two closings, two cost sets, and rate risk during the build. Most borrowers prefer one-time close when it’s available.
The lender releases funds in 4–7 stages tied to completed milestones (foundation, framing, rough-ins, interiors, final). An inspector verifies each stage before money is released. You pay interest only on the amount drawn so far, so payments start small and grow as the build progresses.
Yes. The lender reviews the builder’s license, insurance, references, financials, and track record before approving the loan. Established builders pass easily; unlicensed or brand-new builders usually don’t. Get the builder vetted early — it’s one of the most common delay points.
Almost never on a lender-financed build. Lenders require a licensed, insured, experienced general contractor — owner-builder construction loans are exceptionally rare. If you’re a licensed contractor yourself, some lenders will consider it; ask before assuming.
The VA program allows it — VA construction loans carry the same 0%-down, no-monthly-MI structure as VA purchases. The challenge is finding a lender that offers them, since few do. That’s a lender-network problem, and it’s exactly what a broker with roughly 200 lending partners is built to solve. Ask.
It’s a “subject to completion” appraisal — the appraiser values the finished home based on your plans, specs, and the builder’s contract, using comparable new-construction sales. The loan is underwritten against that future value, not the empty lot.
The 5% contingency built into most construction budgets covers minor overruns. Beyond that, you’d need to bring additional cash — the lender won’t increase the loan mid-build. This is why realistic budgeting (and an honest builder) matters more in construction than in any other loan type.
Approval and closing typically take 45–60 days (longer than a purchase, because of builder vetting and the subject-to-completion appraisal). The build itself runs 6–12 months for most single-family homes. Your rate lock must cover the realistic timeline.
Answer a few quick questions and Douglas will personally price your scenario — no automated guesswork, no obligation.
No pressure, no credit pull to have the conversation — just straight answers from a Jacksonville Mortgage Broker.
Douglas Wilkerson — Mortgage Broker, NMLS #1680719
Freeman Douglas Corporation
1548 The Greens Way, Ste. 4, Jacksonville Beach, FL 32250
Direct: (904) 517-4049 · Office: (904) 906-8869
Email: [email protected]
Serving Jacksonville, Jacksonville Beach, St. Augustine, Orange Park, Fernandina Beach, and all of Duval, St. Johns, Clay, and Nassau counties — plus borrowers across Florida and additional states where licensed.
Freeman Douglas Corporation is a DBA of Edge Home Finance. This is not a promise to lend — all credit decisions are subject to approval. Douglas Wilkerson, NMLS #1680719 | Edge Home Finance, NMLS #891464. Verify licensing at nmlsconsumeraccess.org. Equal Housing Opportunity.