One-Time Close Construction Loans
Build Your Home With One Loan and One Closing
A One-Time Close Construction Loan allows qualified buyers to finance the construction of a new home and the permanent mortgage together. Instead of closing once before construction and again when the home is complete, you close one time at the beginning.
Program Snapshot
Building a home is exciting, but the financing can feel overwhelming. Our team helps walk you through the process step by step, from application and builder review to closing, construction, and the final transition into your long-term mortgage.
How It Works
The One-Time Close Process
This loan has a few more moving parts than buying an existing home, but the goal is simple: one loan, one closing, and a clear path from planning to construction.
Builder Review
Before the loan can move forward, the builder must be reviewed and approved for the program. If your builder is not already approved, we can help start that process.
Loan Application
We review your credit, income, assets, employment, and loan details just like a standard mortgage, while also gathering construction-related information.
Construction Cost Review
The full cost of the build is reviewed, including the builder contract, construction-related fees, soft costs, and applicable program requirements.
Disclosures & Appraisal
You review your initial loan disclosures, and the appraisal is ordered based on the future value of the completed home.
Underwriting & Project Approval
Your loan file and the construction project are both reviewed. This includes your borrower approval and the builder/project approval.
Closing & Construction
Once everything is approved, you close one time before construction begins. After closing, funds are released in stages as work is completed.
Often a fit for primary residence buyers wanting FHA financing.
May offer up to 100% financing for qualified veterans and service members.
May allow primary residence or second home financing with qualifying credit and equity.
During Construction
Funds Are Released as Work Is Completed
After closing, your builder can begin construction. Funds are released through a draw process as certain stages of the home are completed and verified.
Draws are not advanced upfront for materials. They are based on completed work, inspections, and construction progress.
Builder requests funds as work is completed.
Progress is verified before funds are released.
Payment structure can vary by loan type. Conventional buyers generally pay interest only on funds disbursed during construction.
Once the home is complete, the loan transitions into the permanent mortgage phase.
Property Types
What Types of Homes May Be Eligible?
Eligible property types depend on the loan program. FHA and VA may allow site-built, manufactured, modular, and eligible panelized homes. Conventional One-Time Close allows site-built, modular, and eligible panelized homes.
Barndominiums may be considered with restrictions. Certain property types, including log homes, bamboo homes, metal homes, container homes, and post-frame homes, are generally not eligible.
The appraisal is based on the home’s value “as completed,” using the final construction contract, plans, specs, and plot plan. Appraisal transfers are not allowed on these OTC programs.
When the Home Is Complete
No Second Closing Required
Once construction is complete, final inspections and required construction documents are completed. The loan then transitions into the permanent mortgage phase. The program is designed so you do not return to the closing table for a second closing.
For conventional loans, requalification may be required in certain situations, such as if the project goes beyond 12 months, the credit score is under 700, or the property value declines at final inspection.
FAQs
Common Questions About One-Time Close Construction Loans
Here are a few helpful things to know before getting started.
When is closing?
You close one time before construction begins. This closing covers both the construction phase and the permanent mortgage phase.
Do I have to re-qualify after construction is complete?
FHA and VA are designed as true one-time close options with no second closing. For conventional OTC loans, requalification may be required in certain situations, including if the project extends beyond 12 months, if the representative credit score is under 700, or if the property value declines.
When do my regular mortgage payments begin?
Your full mortgage payment begins after construction is complete and the loan transitions into the permanent mortgage phase. Conventional borrowers generally make interest-only payments during construction based on funds that have been disbursed.
Does the builder have to be approved?
Yes. The builder must be reviewed and approved before closing. If you already have a builder in mind, our team can help determine what is needed.
What types of homes may be eligible?
Eligible property types depend on the loan program. FHA and VA may allow site-built, manufactured, modular, and eligible panelized homes. Conventional may allow site-built, modular, and eligible panelized homes. Barndominiums may be considered with restrictions.
Can I do some of the construction work myself?
No. The builder must be responsible for the full turnkey completion of the home. The borrower cannot complete any portion of the construction work.
What happens if construction costs go over budget?
The loan amount cannot be increased after closing. If costs increase above the approved loan amount, the borrower may be responsible for paying those additional costs out of pocket directly to the builder.
What happens if construction takes longer than expected?
Construction terms may be structured for 6, 9, or 12 months depending on the program and lock period. If construction exceeds the locked period, the rate may need to be reviewed or relocked at current market pricing.
Can lot equity be used?
In some cases, lot equity may be used toward down payment and closing costs, depending on the loan program, ownership of the lot, and loan-to-value requirements.
Ready to Build?
Let’s Talk Through Your Construction Loan Options
Whether you already have a builder, land, or just a dream of building, our team can help you understand your financing options and what steps come next.