With easy access to a vibrant arts and cultural scene, 60-plus miles of scenic trails through the Blue Ridge Mountains, top-rated schools, and a warm, welcoming community, it’s no wonder that more discerning buyers are choosing Blacksburg, Virginia, to build their new dream homes. But to make each dream home a reality, it takes financing.
Fortunately, there are multiple financing options for building your dream home in one of Blacksburg’s most desirable communities, The Homes at Berry Ridge. When you build a custom home at Homes at Berry Ridge, one of the first big decisions you’ll make is selecting the right financing structure.
New-construction financing works differently than a traditional mortgage, and choosing the right option can influence your cash flow, rate stability, long-term budget, and even how quickly your home can begin construction. Below is an overview of the most common loan types available to buyers building a new custom home — along with the advantages and drawbacks of each.
Got questions? Contact us to learn how we can put you in touch with one of our preferred lenders to help you understand your financing options and make the process as smooth as possible. You’re also welcome to use a lender of your choice.
1. Construction-to-Permanent Loan (Single-Close Loan)
Best for: Buyers who want rate stability, predictable costs, and a streamlined closing process.
A construction-to-permanent loan (often called a “single-close loan”) combines your construction financing and long-term mortgage into one package. You close once up front, secure your interest rate, and transition automatically into a permanent mortgage once your home is complete. Many lenders offer extended rate locks for up to 18 months, which can be a major advantage in rising-rate environments.
Pros
- One closing, lower fees: You avoid paying duplicate closing costs and reduce paperwork.
- Long rate-lock protection: Ideal if rates are rising during your build timeline.
- Predictable payments: You know your long-term interest rate and mortgage terms from day one.
- Simplified process: Fewer lender approvals are required throughout construction.
Cons
- Less attractive when rates are flat or trending down: You might miss out on future lower rates.
- Stricter approval standards: Because the lender carries risk for both phases, underwriting can be more detailed.
- May require higher upfront reserves: Some lenders require more cash on hand or stronger financial profiles.
2. Two-Time Close: Construction Loan + Permanent Mortgage
Best for: Buyers who want flexibility and think interest rates may drop during construction.
A two-time close loan uses two separate loans: one for construction and one for the final mortgage. You close on a construction loan first, pay interest-only during the build, and then refinance into a permanent mortgage after the home is completed.
Pros
- Flexibility to shop rates later: If mortgage rates fall during the build, you can secure a lower permanent interest rate.
- Easier lender selection: Some buyers choose one lender for construction and another for the mortgage.
- Lower initial requirements: Construction-only loans may have slightly easier qualification standards upfront.
Cons
- Two closings = two sets of costs: You’ll pay closing fees twice.
- No long-term rate protection: If rates rise during construction, your permanent mortgage could be more expensive.
- More paperwork and timeline coordination: Additional underwriting, appraisal, and administrative steps.
3. Cash Option (Owners Act as Their Own Bank)
Best for: Buyers with substantial liquid assets who want the fastest, simplest build process.
Some homeowners choose to pay cash for construction and take out a mortgage later (or not at all). In this scenario, you act as your own lender for covering draws, based on work completed, based on a pre-approved construction draw schedule, which holds ten percent back until the final completion of the home.
Pros
- Fastest path to construction: No lender approvals or inspections.
- No interest payments: You avoid loan fees and carrying costs.
- Maximum flexibility: You control the payment schedule and timing.
Cons
- Larger upfront capital required once the home is being constructed: This is not feasible for many buyers.
- Opportunity cost: Cash tied up in construction cannot be used for investments or liquidity needs.
4. Builder’s Line of Credit (Builder-Financed Construction)
Best for: A builder’s line of credit is ideal for buyers who want the easiest process with minimal involvement in construction financing.
In some cases — especially with experienced custom builders — a builder may choose to fund the build through their own line of credit. The homeowner then closes on a mortgage only after the home is complete. This structure simplifies the buyer experience but isn’t offered by all builders.
Pros
- Easiest process for the buyer: No construction loan required on your end.
- Only one closing: You finalize a traditional mortgage when the home is complete.
- No monthly interest payments during construction: The builder manages their own financing.
- Less oversight for you: Inspections, draw schedules, and loan compliance are handled by the builder.
Cons
- Not always available: Builder discretion and capacity determine availability. Fortunately, this IS an option for financing your new home at The Homes at Berry Ridge.
- Less rate-lock flexibility: You cannot lock in a mortgage rate until construction is nearing completion.
At The Homes at Berry Ridge, you can work with one of our preferred lenders who specialize in new construction financing for your new home, or pay cash, or use your own favorite lender. We can help you find lenders who fully understand your options, from construction loans to end loans, and who will make the process as smooth as possible.
Take the Next Steps to Make Your Dream Home a Reality at The Homes of Berry Ridge in Blacksburg
Now that we’ve covered your options for financing your new Blacksburg home, here’s a quick review of our process to begin your construction at The Homes at Berry Ridge. A minimal, fully refundable deposit of $5,000 is required to secure your lot, giving you peace of mind as you proceed with your design plans.
Our builder, Legacy Builders NRV Inc., will work closely with you to refine your vision and ensure every detail is meticulously incorporated into the final design. Rest assured that your custom home will truly reflect your style, budget, and desires.
Once all the overall costs are determined, a comprehensive purchase agreement will be issued. This agreement serves as the final step to solidify your ownership of the lot and initiate the construction of your dream home. At this stage, an additional $45,000 commitment payment is required, bringing your total deposit to $50,000 at contract signing.
During this entire process, your Homes at Berry Ridge realtor, Bill Aden of Coldwell Banker Townside, REALTORS®, and Nancy Phillips of Legacy Builders NRV Inc., will personally guide you through every step, from selecting the perfect home site to finalizing the purchase agreement.
Ready to take the next step to create the new home you’ve always dreamed of in Blacksburg, Virginia? Contact Bill Aden today to schedule a consultation and start building the home of your dreams at The Homes at Berry Ridge. Experience the joy of a seamless and personalized homebuilding journey that surpasses your expectations and fulfills your vision for the perfect home.