Question 1

Does my land count toward the down payment?

Accepted Answer

Land equity you already own commonly counts toward the required investment, based on the program's calculation of total project cost or completed value.

Question 2

What is a One Time Close Construction Loan?

Accepted Answer

A single loan that funds construction and then converts to a permanent mortgage without a second closing, so you pay one set of closing costs. It is intended for eligible custom home construction scenarios.

Question 3

How does a One Time Close loan work?

Accepted Answer

You close before construction begins, the builder is paid in draws as work is completed, and at completion the loan converts to your permanent mortgage under the terms set at the original closing.

Question 4

Do I need to own the land first?

Accepted Answer

Not always. Land can often be purchased at the same closing, or land you already own can be brought into the transaction.

Question 5

Can land equity be used toward the transaction?

Accepted Answer

Frequently yes. If you already own the lot, its value may count toward the required equity, which can reduce the cash needed at closing.

Question 6

How is the builder paid during construction?

Accepted Answer

Through scheduled draws tied to completed stages of work, released after inspection rather than in a lump sum up front.

Question 7

How do construction draws work?

Accepted Answer

The builder requests a draw, an inspection confirms the work, and funds are released. Interest during construction is generally charged only on the amount drawn.

Question 8

Is an appraisal required?

Accepted Answer

Yes, based on the plans, specifications and cost breakdown to establish the completed value before closing.

Question 9

When does the permanent mortgage begin?

Accepted Answer

At completion, when the loan converts to the permanent term and regular principal and interest payments start.

Question 10

What is the difference between a construction loan and a renovation loan?

Accepted Answer

A construction loan builds a new home from the ground up. A renovation loan finances improvements to an existing home, either at purchase or on a home you already own. See the renovation loan page.

Custom Home Construction

Who this is for

How the process works

Select and qualify the builder

Finalize plans and budget

Understand the draw schedule

Plan for conversion

Common mistakes

Loan programs that apply

One Time Close Construction Loans

Renovation Loans

Conventional Loans

VA Loans

Frequently Asked Questions

Ready for the next step?