One of the most common questions we receive from families interested in building with Echo Park Houses is: “How does financing work?” It’s a great question because construction financing works differently from a traditional mortgage — and understanding how it works before you start looking at floor plans can save you time, stress, and money.
What Is a Construction-to-Permanent Loan?
A construction-to-permanent loan (also called a one-time close or OTC loan) allows you to finance both the construction of your home and the permanent mortgage in a single loan — with a single closing. Here’s the basic structure:
You apply and get approved for the full amount before construction begins. During the build, the lender makes a series of “draws” — disbursements to the builder as construction reaches specific milestones (foundation, framing, roofing, etc.). You pay interest only on the amount disbursed during construction — not the full loan amount — which keeps your payments manageable while the home is being built. Once the Certificate of Occupancy is issued and you’re ready to move in, the loan automatically converts to a standard 30-year (or 15-year) fixed mortgage. No second closing, no second set of closing costs.
The Draw Schedule
Echo Park Houses works with a straightforward draw schedule tied to construction milestones. A typical 6-draw schedule looks like this:
- Draw 1: Foundation complete and inspected
- Draw 2: Framing, roof structure, and exterior sheathing complete
- Draw 3: Roof cover, windows, and exterior doors installed
- Draw 4: Rough mechanicals (electrical, plumbing, HVAC) roughed in and inspected
- Draw 5: Insulation and drywall complete
- Draw 6: Final — Certificate of Occupancy issued
Down Payment Requirements
Construction-to-permanent loans typically require 5–20% down depending on the loan type and lender. Conventional construction loans often require 10–20% down. FHA one-time close programs allow as little as 3.5% down. VA one-time close options are available for eligible veterans with zero down. If you already own the lot, its value is often credited toward your equity position, which can reduce or eliminate the cash down payment requirement.
Getting Started
We recommend getting pre-qualified for construction financing before or alongside your first consultation with us — it establishes your budget clearly and makes the process much smoother. We work with several Orlando-area lenders who specialize in new construction and understand our build timeline and draw schedule. We’re happy to make introductions. Contact us to learn more.