Custom Homes

Financing

The construction of a custom home may be financed on a cash basis or through a third party lender. In either case, the builder submits a draw request about once a month for work in progress and is reimbursed directly by the homeowner in a cash transaction or by the lender if there is third party financing involved.

The typical scenario involving third party financing involves a "mortgage loan" and an "interim construction loan." The mortgage loan is the loan that takes effect when the home is completed and is similar to a mortgage loan used to finance the purchase of an existing home. Mortgage loans are available through our affiliated company Barton Creek Mortgage LLC, or through a variety of financial institutions. The interim construction loan is a separate loan used during construction to finance the ongoing building project. This is typically an interest only loan during the construction process and interest fees are only levied on amounts outstanding once funds are disbursed. The interim loan is typically paid off by mortgage loan funds when the home is completed.

Another type of loan available is the "one time close mortgage loan" which effectively combines the functions of a mortgage loan and interim loan into a single financial instrument.