Freddie Mac's weekly rate survey came out at 6.95 percent for a 30-year mortgage this week, up from 6.76 percent seven days earlier and close to seven-tenths of a point higher than the same week last year. Clients see a headline like that and assume it is the number that decides whether they can afford to build. Usually it is not, at least not yet. A construction loan is a different product with its own structure, and most of the confusion we clear up on a first call has nothing to do with the rate itself.
What a construction loan actually is
A construction loan is short-term financing that pays your builder in stages as the home goes up, instead of handing you the full amount at closing like a normal mortgage. Once the home is finished and gets its certificate of occupancy, the loan either converts into a permanent mortgage or gets paid off by a separate one you close afterward. The rate you lock for that permanent phase is where a number like this week's Freddie Mac survey actually applies, not the construction phase itself.
One-time close or two-time close
There are two structures, and which one you get depends on your lender. A one-time close, sometimes called single-close, rolls the construction loan and the permanent mortgage into one closing and one set of paperwork. You sign once, pay one set of closing costs, and the loan converts automatically when the house is done. A two-time close is two separate loans and two closings, one to build and a second to refinance into a permanent mortgage once construction wraps. The Consumer Financial Protection Bureau publishes separate federal disclosure guides for both structures, because the paperwork requirements genuinely differ depending on which one your lender uses. Ask which structure you are getting before you sign anything, since it changes your closing costs and how many times you go through underwriting.
How draws work, and where Texas law protects you
Money does not show up in one lump sum under either structure. The lender releases draws as the job hits milestones, typically after the foundation, after framing and the mechanical rough-in, and again as finishes go in. Before each draw, the lender or an inspector confirms the work is actually done. This is the part homeowners worry about most, whether their money is sitting where it should be between draws.
Texas law addresses that directly. Under Texas Property Code Section 162.006, a contractor on a residential homestead contract over $5,000 has to deposit your construction funds into a dedicated construction account, kept separate from the company's own operating money, with records showing exactly what came in, what went out, and to whom. Ask any builder whether they run a construction account under that statute. If they hesitate, that is worth noticing.
Land equity and your down payment
If you already own the lot, most lenders will count its appraised value toward your down payment instead of asking you to bring that much more cash to closing. That is one of the real financial advantages of building on land you already hold. Lenders typically still want 20 to 25 percent equity in the total project between land and cash, so get the lot appraised early and bring that number to the lender conversation, not after you have already picked floor plans.
None of this changes whether now is the right time to build. It changes whether you walk into the loan conversation asking the right questions. Run the cost estimator for a real range on your project, or tell us about your lot and your timeline and we will walk you through financing before you talk to a lender, not after.
Sources: Freddie Mac, Primary Mortgage Market Survey, 30-year fixed rate averaging 6.95% for the week of September 17, 2026, up from 6.76% the week prior and about 6.26% a year earlier (freddiemac.com/pmms); Consumer Financial Protection Bureau, "Know Before You Owe: Mortgage Disclosures and Construction Loans" (January 2016) and TRID construction loan disclosure guides for single-close and two-close transactions (December 2019) (consumerfinance.gov); Texas Property Code Section 162.006, Construction Account Required in Certain Circumstances (statutes.capitol.texas.gov).