First Time Close Construction Loan

A First-Time Close Construction Loan (often called a One-Time Close Construction Loan or Construction-to-Permanent Loan) is a mortgage that covers both the construction of a home and the permanent mortgage with only one closing.

Instead of getting two separate loans (one for building and another for the mortgage), everything is combined into one loan process.

1. Loan approval before construction begins
2. The lender funds the construction in stages (called “draws”)
3. The home is built
4. Once construction is finished, the loan automatically converts into a regular mortgage
    

So the buyer only closes once.

Land purchase: $120,000
Construction cost: $480,000

Total loan amount: $600,000

During construction:

• Borrower usually pays interest-only payments
   

After completion:

• Loan converts into a 30-year mortgage.
   

Common options include:

• FHA One-Time Close 
• VA Construction Loan 
• USDA Construction Loan 
• Conventional Construction-to-Permanent Loan
   

These programs are commonly used for custom homes or building on land.

✔ Only one closing cost
✔ Locked interest rate before construction starts
✔ Simpler loan process
✔ Less paperwork than two separate loans

• Credit score: usually 620+ 
• Down payment: about 3.5%–20% depending on program 
• Approved builder 
• Construction plans and cost breakdown 
• Land purchase or owned land
   

Build cost: $700,000
Down payment: 5% ($35,000)

Loan covers:

• Land 
• Construction 
• Permanent mortgage
   

The borrower moves into the home once construction is finished.