Construction to Mini-Permanent Loans in Houston Made Easy

October 21, 2022

Houston is one of the most vital economic regions in the U.S., attracting investors and new residents that often arrive with immediate construction and housing needs. Personal construction loans and mini-permanent home mortgages* are reliable financing options but applying for these loan options separately may be expensive and time-consuming.

*NOTE: Some creditors may offer one-time-close construction loans that include a permanent mortgage, but Texas Gulf Bank’s one-time close construction loans only include a mini-permanent mortgage.

A home construction to mini-permanent mortgage loan in Houston is an ideal solution for home buyers and property developers who need strategic financing solutions that save time and money. Learn how a construction to mini-permanent mortgage loan works, the projects that work best with this financing option, and the loan application process.

The Basics of Construction to Mini-Permanent Loans

A construction to mini-permanent mortgage loan is a short-term construction loan that later converts to mini-permanent financing, enabling borrowers to finance both the purchase and construction of a residential or commercial property. Approved borrowers have the funds needed for the property purchase, construction period, and a mini-permanent loan – all in one closing process.

If approved, funds are disbursed directly to the builder as each building milestone is met within the established construction timeline. Borrowers make interest-only payments based on the funds disbursed during the short-term construction period; then, will begin to make payments of principal and interest upon conversion to the mini-permanent mortgage.

What Are the Benefits of a Construction to Mini Permanent Loan?

The biggest advantage of choosing a construction to mini-permanent mortgage loan is that it offers significant time and cost savings.

Borrowers benefit by:

Completing a single application process.
Locking in a fixed interest rate for both construction and mortgage payments.
Paying just one set of closing costs, including such items as appraisal fees, attorney fees, etc.
Having peace of mind that mini-permanent mortgage financing is in place when construction is complete.

An added benefit of this loan program is that it significantly reduces potential risk for borrowers since you only have to qualify a single time for the construction loan and mini-permanent mortgage.

This loan program is a popular choice for individuals developing property because of the financial flexibility and protections offered. These loans can protect borrowers from rising costs by locking in interest rates early. Plus, having to only make interest payments during construction creates more buying power and frees up cash for other needs.

Is Your Project Right for a Construction to Mini-Permanent Loan?

Purchasing property is a major investment, but with higher real estate prices and a limited inventory, buyers must carefully weigh all their options. If existing homes or properties do not meet your exact needs, a construction project may be necessary to build your dream home or make desired renovations.

A construction to mini-permanent loan provides borrowers, especially property developers, a way to pay off their interest-only construction loan by refinancing it. This affords them time to generate more income by selling the property or to reach sufficient occupancy (in the case of multifamily structures, office and retail spaces). Construction to mini-permanent loans streamline the loan process for borrowers. Applicants may be able to use the value of their existing lot of land to be used as equity towards a down payment, allowing you to maximize your financing amount.

A construction to mini-permanent loan is an effective financing solution for a wide variety of projects, such as:

Primary home
Second home
Vacation home
Investment property
Commercial property improvement
Major home renovation and refinancing

Although a construction to mini-permanent loan is generally used for residential construction projects, it may also be used by commercial developers to cover the cost of tenant improvements in an existing property. This loan option is also ideal for borrowers who want to tear down an existing home and construct a new home on their own lot, then refinance the remaining mortgage.

Construction to Mini-Permanent Loan Application Requirements

When you choose Texas Gulf Bank for your construction to mini-permanent loan financing, your streamlined application process will begin with an initial assessment with one of our qualified lenders. We will discuss your construction needs and loan goals and ask that you provide financial documentation as part of our review.

Required documents include, but are not limited to:

Completed loan application.
3 years of business or personal tax returns and/or financial statements.
3 months of business and personal bank statements.
Copy of land deed if owned, or a contract for land purchase.
Building construction contract.
Construction design.
Building and fund draw schedule.
Construction budget.

Once the required documentation is submitted, our loan review team will evaluate your application and make a final determination on loan approval. Your prompt document submission helps ensure the timely processing and closing of your loan.

As a community bank, we offer in-house reviews and decisions, potentially resulting in an expedited loan process that exceeds the industry standard. If approved, you may be able to move forward quickly with your construction phase.

Choose Texas Gulf Bank for Your Loan Needs

With over 100 years of banking experience in the region and a commitment to building solid relationships with clients, Texas Gulf Bank can help you achieve your construction and ownership goals.

We offer various residential and commercial financing options, competitive rates, and an in-depth understanding of the Houston market. Our experienced team of lenders will discuss available loan options that meet your specific needs and can guide you through each step of the application process.

Contact our team of loan officers today to learn more about construction to mini-permanent loans in Houston. You can also get started on the application process by completing the form above. We look forward to supporting your real estate needs.

All Loans Subject to Credit Approval