Who it is for
- Buyers building a primary residence on owned or purchased land
- Borrowers who want to lock their permanent rate before construction
- Buyers who want to avoid paying two sets of closing costs
- VA-eligible borrowers building with 0% down (VA one-time-close)
Typical One-Time-Close Construction Loans requirements
| Down payment | Typically 10-20%; VA one-time-close 0% for eligible veterans |
|---|---|
| Closings | One, construction and permanent financing combined |
| Rate lock | Locked upfront, often for 12 months through construction |
| Builder | Must be lender-approved: licensed, insured, experienced |
| Draws | Funds released in phases as inspections verify progress |
| Loan types | Conventional, FHA, VA, USDA one-time-close variants |
Figures are typical market ranges as of October 2026. Actual terms depend on the lender, your credit, the property and the program, and are confirmed on your Loan Estimate or term sheet.
How it works
- Get pre-approved and select a lender-approved builder with your plans and budget.
- The lender appraises the project on its future completed value.
- Close once: the loan covers the lot payoff (if any), construction draws, and converts to the permanent mortgage.
- During construction you typically pay interest-only on drawn funds.
- Inspections release each draw; the builder is paid in phases, not upfront.
- At completion, the loan converts to your permanent mortgage, no second closing, no re-qualification.
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Pros and cons
Advantages
- One closing means one set of closing costs
- Rate locked before construction starts, no rate risk during the build
- No re-qualification after the build finishes
- VA one-time-close allows 0% down for eligible borrowers
Trade-offs
- Fewer lenders offer single-close; shopping is harder
- Rate locks are long (12 months) and often carry lock premiums
- Builder must meet lender approval, your preferred builder may not qualify
- Change orders and delays still cost you, even with the rate locked
Documents you’ll need
- Construction contract with line-item budget
- Builder license, insurance, and references
- Plans and specifications
- Lot deed or purchase contract
- Permits (or permit applications)
- Standard income, asset, credit, and ID documents
One-Time-Close Construction Loans FAQ
What is the difference between one-time-close and two-time-close?
One-time-close combines construction and permanent financing in a single loan and closing. Two-time-close uses a short-term construction loan, then a separate mortgage at completion, two closings, two cost sets, and rate risk during the build.
Can I get a one-time-close VA construction loan?
Yes, VA one-time-close construction loans exist through select lenders and allow 0% down, but the lender and builder pool is smaller than conventional.
Who approves the builder?
The lender does. Expect requirements around licensing, insurance, financial stability, and a track record of completed homes. Start builder approval early, it is a common bottleneck.
What happens if construction runs over budget?
Cost overruns are generally your responsibility unless the contract says otherwise. Lenders typically require contingency reserves (often 5-10%) built into the budget.
How long does a one-time-close take to close?
Plan on 45-60 days from application to closing, longer than a standard purchase. Builder approval and the as-completed appraisal are the usual bottlenecks.
What down payment do I need?
Typically 10-20% of the total project cost (land plus construction). VA one-time-close allows 0% down for eligible veterans.
Do I make payments during construction?
Yes, interest-only payments on the amount drawn so far. Your payment grows as more draws are released to the builder.
Can I be my own builder?
Generally no. Lenders require a licensed, insured builder with a track record. Owner-builder one-time-close programs are extremely rare.
What if the appraisal comes in low?
The loan is based on the as-completed appraised value. If it comes in below your project cost, you cover the difference in cash or cut the budget.
Official sources
How One-Time-Close Construction Loans compare
| One-Time-Close Construction Loans | Land & Lot Loans | Ground-Up Construction Loans | Conventional Loans | |
|---|---|---|---|---|
| Best for | Buyers building a primary residence on owned or purchased land | Buyers securing a homesite now and building in 1–3 years | Spec builders | Buyers with good credit and steady income |
| Down payment | Typically 10-20%; VA one-time-close 0% for eligible veterans | Typically 20–50%; improved lots less, raw land more | , | 3% (eligible first-time buyers), 5%+ otherwise; 15–25% on investment property |
| Credit | , | , | , | 620 |
| Income docs | , | , | , | , |
Typical ranges, your Loan Estimate or term sheet confirms actual terms.
Coming soon: a 2-minute walkthrough from our loan team.
Related programs
Land & Lot Loans
Buying vacant land before you build takes a different loan than buying a house.
Ground-Up Construction Loans
An investor construction loan funds land (or a land payoff) and vertical construction of a new 1–4 unit home in draws, then is repaid by sale or a permanent refinance.
Conventional Loans
A conventional loan is a mortgage not insured by the government that follows Fannie Mae or Freddie Mac guidelines.
VA Loans
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs that lets eligible veterans, active-duty service members and certain surviving spouses buy with no down payment and no monthly mortgage insurance.