Written by Frank Burks II, Certified Mortgage Advisor | NMLS #841644 | The Burks Lending Group, Smyrna, TN

Some folks tour a dozen houses and never feel it. The kitchen’s wrong. The yard’s too small. The layout fights the way they live. At some point the question changes from “which house?” to “why not build the one we want?”

Here’s what stops a lot of people: they’ve heard construction loans are a headache. Two loans. Two closings. Qualify once to build and again to move in, and pray rates don’t jump in between.

That’s the old way. I’m Frank Burks II, and I help families across Middle Tennessee build with a one-time close construction loan. One application, one closing, and your rate locked before the first nail. Here’s how it works.

What Is a One-Time Close Construction Loan?

A one-time close construction loan, sometimes called a construction-to-permanent loan, covers building your home and your permanent mortgage in a single loan. You close once, before construction starts. During the build, your builder gets paid in stages, and you pay interest only on the money that’s been drawn. When the house is finished, the loan converts to your regular mortgage. No second closing. No qualifying all over again.

One Closing vs Two: Why It Matters

Two-time close: You take out a short-term construction loan, then refinance into a permanent mortgage when the house is done. That means two closings, two sets of closing costs, and qualifying a second time. If rates rise or your job changes during the build, that second loan can get harder or more expensive.

One-time close: One closing before you break ground. One set of closing costs. You qualify once, and your rate is set at closing, so the market can’t move the goalposts while the walls go up.

Three Ways to Qualify

Not everybody who wants to build earns a paycheck the same way. That’s why I work with three construction paths.

Build your home (W-2 or traditional income): For a primary residence or second home. Credit scores start at 700, with as little as 10% down, and gift funds are allowed. Build periods of 12, 15, or 18 months, interest-only while you build, and a 30-year fixed when it converts.

Build without tax returns (self-employed): Your write-offs saved you money on taxes. They shouldn’t cost you the house. This path can qualify you on 24 months of personal or business bank statements, a CPA-prepared profit and loss statement, or your assets. Scores start at 700, with loan amounts up to $3.5 million. If this is you, my guide to bank statement loans in Tennessee explains how deposits turn into qualifying income.

Build a rental (investors): Qualify on what the finished home will rent for, not what you earn. No personal income documents, scores from 680, up to 75% loan-to-value, loans up to $3 million, and a minimum 1.15 DSCR on projected rent. It works for single-family, 2 to 4 units, and modular homes, and short-term rentals are allowed where local permits allow. Here’s how DSCR loans work for Tennessee investors.

Program guidelines change, so I’ll confirm the current terms for your build before you commit to anything.

How the Build Works, Start to Finish

1. Plan your budget first. Before you sign a builder contract, we figure out what you qualify for and what the payment will look like when the home is done. Building without a budget is how dream homes turn into stress.

2. Line up your lot and builder. You can buy a lot as part of the loan or use one you already own. If you own your lot, its equity may count toward your down payment, depending on the program. Your builder needs to be approved by the lender, which usually means licensed, insured, and experienced.

3. Plans, specs, and appraisal. The lender reviews your plans, the builder contract, and a detailed cost breakdown. The appraiser values the home as if it were already built, based on those plans.

4. Close once. Construction financing and your permanent mortgage close together. Your rate is locked.

5. Build with draws. Your builder is paid in stages as work gets done, with inspections along the way to confirm progress. You pay interest only on what’s been drawn, so early payments tend to be small.

6. Move in. When the home passes final inspection, the loan converts to your permanent mortgage and your regular payments begin.

Tips Before You Break Ground

Talk to me before you sign with a builder. Some builder contracts don’t fit certain loan programs. It’s much easier to set it up right from the start than fix it later.

Build in a cushion. Lumber prices change. Weather happens. A contingency reserve in your budget keeps a surprise from turning into a crisis.

Keep your credit steady. Avoid new car loans or credit cards while your home is being built. You qualified once, so let’s keep it clean all the way to the keys. Not sure where your score stands? Start with my guide to credit scores for buying a home in Tennessee.

Know why having more lenders matters. Fewer lenders offer one-time close loans, and their rules vary a lot. That’s where my 200+ lending partners make a real difference. I explain the difference in my post on mortgage brokers vs banks.

Frequently Asked Questions: Construction Loans in Tennessee

Q: What is a one-time close construction loan?

A one-time close construction loan combines the construction loan and the permanent mortgage into one loan with one closing before construction begins. The borrower pays interest only on funds drawn during the build, and the loan converts to a permanent mortgage when the home is complete, with no second closing.

Q: What credit score do I need for a construction loan in Tennessee?

Through my lending partners, one-time close programs start at a 700 credit score for primary residences and second homes, including self-employed options, and at 680 for investment properties qualified on projected rent. Guidelines vary by program and can change.

Q: How much down payment do I need to build a house?

For a primary residence with traditional income, one-time close programs can start at 10% down, and gift funds are allowed. Self-employed and investor programs usually require more. If you already own your lot, its equity may count toward the down payment, depending on the program.

Q: Can I get a construction loan if I am self-employed?

Yes. A Non-QM construction loan can qualify self-employed borrowers on 24 months of bank statements, a CPA-prepared profit and loss statement, or assets instead of tax returns, with loan amounts up to $3.5 million.

Q: Can I build a rental property with a construction loan?

Yes. A DSCR construction loan qualifies investors on the projected rent of the finished property instead of personal income. Programs allow up to 75% loan-to-value and require a minimum 1.15 debt service coverage ratio on projected rent.

Q: What payments do I make while my house is being built?

During construction, you typically pay interest only on the amount that has been drawn to pay your builder. Payments start small and grow as more of the loan is used. Once the home is complete, the loan converts and regular principal and interest payments begin.

Everybody Deserves a Key. Even the One You Build.

You don’t have to settle for a house that almost fits. Pick the lot, pick the layout, and let’s put a plan behind it with one closing and a rate you can count on.

Tell me about your build at go.theburkslendinggroup.com/construction, or start your Secure Application and call me at 615.364.5700. I’ll show you the path, the budget, and the next step.

This is not a commitment to lend. All loans are subject to credit approval, underwriting, and property eligibility. Program terms and guidelines are subject to change.

Frank Burks II | Certified Mortgage Advisor | NMLS #841644

The Burks Lending Group empowered by NEXA Lending | NMLS #1660690 | 615.364.5700

theburkslendinggroup.com | fburks@nexalending.com | Equal Housing Opportunity