Construction-to-Permanent Loans in Florida: One Closing, Two Phases
A construction-to-permanent loan Florida builders use closes once and converts at completion. Here is how draws, rate locks and contingency work.
Educational content only. This article is for informational purposes and does not constitute financial, legal, or lending advice. Loan programs, rates, and eligibility requirements change frequently. Consult a licensed mortgage professional before making any borrowing decision. Mortgage Capital | NMLS# 1859012 | Licensed in Florida.
A construction-to-permanent loan Florida borrowers use covers the build and the mortgage in a single closing. It converts to a standard loan when the house is finished.
The alternative is a construction loan followed by a separate refinance, which means two sets of closing costs and a second underwriting at whatever rates exist then. Our construction loan page covers both.
How the draw phase works
The lender releases funds in stages as the builder completes each phase and an inspector signs it off. You pay interest only on what has been drawn.
That means early payments are small and grow toward completion, when the balance is highest.
Model the total interest during the build on the construction-to-permanent calculator. It is a real project cost and belongs in the budget.
Rate locks matter more here
Some lenders lock the permanent rate at the initial closing with an extended lock. It costs more up front and removes the risk of finishing into a higher-rate market.
Others float until completion, which is cheaper now and riskier later.
On an eleven-month Florida build, that choice can be worth more than the rate you negotiate. Ask about it explicitly.
Florida-specific budget lines
Impact fees, wind-load engineering and county permitting run heavier here than most first-time builders expect.
Coastal parcels may need elevation certificates and additional review, which adds both cost and time.
Insurance during the build is a builder's risk policy, not a homeowners policy, and it converts at completion. Confirm who carries it.
Contingency is not optional
Lenders require a contingency reserve, commonly 10% or more. Overruns above it come out of pocket, because the loan was sized at closing.
Weather delays and material pricing make Florida overruns common enough that a thin contingency is a real risk.
If you already own the lot, that equity usually counts toward your down payment. See land loans if you are buying the parcel first, and the construction loan calculator to size the project.
Fannie Mae publishes its construction-to-permanent requirements openly, and the Fannie Mae HomeReady page covers the low-down-payment options that can pair with a build. Start with a pre-approval.