DFW’s fast growth means two common paths for buyers: building brand new, or buying an older home with the right bones and fixing it up. Each has its own loan type — here’s the difference.
Quick Answer
• Building new: A construction-to-permanent loan finances the build and converts to a standard mortgage at completion — one closing instead of two
• Buying a fixer-upper: A renovation loan wraps the purchase price and repair costs into a single loan
• Both: Involve draw schedules and inspections as work is completed
How a Construction-to-Permanent Loan Works
This loan funds your builder in stages as construction milestones are completed, then automatically converts into a standard mortgage once the home is finished — meaning one application, one approval, and one closing instead of financing the lot, then the build, then refinancing separately.
How a Renovation Loan Works
Programs like FHA 203(k) or conventional renovation loans let you finance a home’s purchase price plus the cost of repairs or updates in a single loan, with funds released as contractor work is completed and verified. This opens up homes other buyers pass on because they need work — often meaning less competition for you.
Is This the Right Fit?
Construction-to-permanent loans suit buyers building on land they own or are purchasing. Renovation loans suit buyers who’ve found a home with a lower price tag because of needed updates, and would rather finance the fix-up than pay cash out of pocket.
FAQ
Do I need a licensed contractor for a renovation loan?
Yes, typically — lender-approved, licensed contractors are usually required for the work to qualify for draw funding.
How long does construction financing take to close?
It varies by builder timeline and loan complexity — worth discussing your specific project early so we can map out a realistic schedule.
Let’s Talk Through Your Situation
Every borrower’s situation is different — the fastest way to know what fits is a quick, no-obligation conversation.
Cristina Calk
Team Calk | Fairway Independent Mortgage Corporation
Phone: 817-929-6239
Website: TeamCalk.com
NMLS# 497446 (Cristina Calk) | Fairway Independent Mortgage Corporation, NMLS# 2289. Equal Housing Lender. Programs and eligibility requirements are subject to change without notice and are current as of the publish date of this article; contact us for current terms. This is not an offer to extend credit or a commitment to lend, and no interest rate or Annual Percentage Rate (APR) is quoted in this article unless explicitly labeled and sourced. Contact us for a personalized rate quote and Loan Estimate, which will disclose your actual interest rate, APR, estimated payment, and closing costs in compliance with the Truth in Lending Act (Regulation Z). This article is for informational purposes only and is not tax, legal, or financial planning advice.