One-Time Close Construction Loans

What is a one-time close construction loan?

A one-time close construction loan finances both the construction of your new home and the permanent mortgage that follows. You close once, lock your rate upfront, and avoid multiple loans, approvals, and sets of closing costs.

You can use it to purchase land, build a primary home, second home, or investment property. When construction is complete, the loan automatically converts to a traditional 15- or 30-year mortgage.

How it works

• One closing for construction and permanent financing
• Interest-only payments during construction
• Funds released in draws at key stages of the build
• Time allowed to complete construction varies by program
• Rate locked upfront to help protect against market changes

Loan options

Conventional one-time close

• As little as 5% down (program- and borrower-specific)
• Competitive rates for well-qualified borrowers
• Suited for long-term flexibility and equity building

VA one-time close

• Eligible Veterans and service members may qualify for 0% down (up to program limits)
• No payments may be required until you occupy the home (program-specific)
• Designed for qualifying VA-eligible borrowers building a new home

FHA one-time close

• Low down payment options, typically starting at 3.5% (subject to guidelines)
• More flexible credit requirements than many conventional loans
• Helpful for buyers who do not meet conventional standards

Benefits

• One loan, one approval, one closing
• Potentially lower total closing costs than separate construction and permanent loans
• Rate protection during the construction period
• Financing for land and construction in a single package
• Multiple program types to fit different borrower profiles

Considerations

• Rates may be higher than some traditional purchase or refinance loans
• Programs and availability vary by lender and location
• Changes to plans or budget during construction may require re-approval

Typical requirements

Exact requirements depend on the loan program, property, and borrower profile. Common factors include:

• Minimum credit score and qualifying income based on program guidelines
• Minimum down payment based on loan type and occupancy
• Use of an approved, licensed builder
• A signed construction contract and detailed plans and specs
• Full underwriting and appraisal before construction begins

Basic process

1. Choose an approved builder and finalize your plans and contract.
2. Apply for your one-time close construction loan.
3. Complete underwriting, appraisal, and approval.
4. Close once on the construction-to-permanent loan.
5. Builder requests draws as work is completed and inspected.
6. When construction is finished and conditions are met, the loan converts to a permanent mortgage.

Is a one-time close construction loan a good fit?

A one-time close construction loan may be a good option if you want a simplified, predictable, and cost-efficient way to build a home without managing multiple loans or worrying about rate changes during construction.

Talk with a licensed loan officer to review your goals, eligibility, and local program availability. They can walk you through numbers, timelines, and requirements so you can decide with confidence.