Construction & Renovation
One Time Close Construction Loans
How a single closing construction to permanent loan works, what builders and lenders require, and how draws, contingencies and rate locks are handled.
Updated 2026-08-17| Applies to: Buyers building a new home with a licensed builder on owned or purchased land.
The short answer
A one time close construction loan funds the build and converts to permanent financing with a single closing, so you sign once, pay one set of closing costs and avoid requalifying when the home is finished.
Two closing construction loans require you to qualify again at completion, which exposes you to changes in income, credit and rates during the build. A one time close removes that second approval.
How the process runs
- 1.Approval based on your qualifications plus the builder's contract and plans
- 2.Appraisal of the completed home based on plans and specifications
- 3.One closing that establishes both the construction and permanent terms
- 4.Draws released to the builder as inspections confirm completed stages
- 5.Interest typically paid only on funds drawn during construction
- 6.Automatic conversion to the permanent payment at completion
What lenders review on the builder
- Licensing, insurance and construction experience
- A fixed price contract with a detailed cost breakdown
- A realistic construction timeline
- A contingency reserve for overruns
Occupancy and loan to value
Terms depend on how the finished home will be used. Primary residences receive the most favorable structures, second homes are more limited and investment property builds carry the tightest loan to value limits. Confirm those specifics for your occupancy type before you sign a builder contract.
Cost overruns and change orders
Changes after closing are the most common source of stress. Every change order affects the budget, and funds beyond the approved amount usually come out of pocket. Finalize selections before closing whenever possible.
Construction program terms, loan to value limits and builder requirements vary by lender. Not a commitment to lend.
Common mistakes to avoid
- Signing a builder contract before confirming the builder meets lender requirements
- Planning a tight timeline with no contingency for weather or material delays
- Assuming change orders can simply be added to the loan
- Overlooking how the finished home's intended use changes the loan to value limit
Related loan programs
Frequently Asked Questions
People also ask
Can I buy a home with no money down?
It is possible through VA loans for eligible veterans and service members, or USDA loans for eligible properties and household incomes, though qualification requirements apply.
Read: How Much Down Payment Do I Need to Buy a Home?How far back do bank statements need to go?
Many lenders request two to three months, but this can vary, and any unusual large deposits within that window may require additional explanation.
Read: Mortgage Application Document ChecklistIs it harder to get a home inspected in winter in Ohio?
It is not impossible, but heavy snow can limit an inspector's ability to fully assess the roof and exterior grading. Ask your inspector how conditions affected their evaluation.
Read: Seasonal Considerations for Northeast Ohio HomebuyersWhy is condo financing more complicated?
The lender is lending against a unit in a shared project, so the association's finances, insurance and occupancy mix affect the collateral.
Read: Condo Financing ExplainedDo I close twice?
Not with a one time close construction to permanent loan. You close once, and the loan converts at completion. A two time close structure has a separate construction loan and a separate permanent refinance, with two sets of closing costs.
Read: Construction to Permanent Loans ExplainedWhich is cheaper overall?
Usually the one time close, because you pay closing costs and title work once instead of twice. The exact difference depends on loan size and the fees on each structure.
Read: One Time Close vs Two Time Close Construction LoansTerms used in this guide
- New Construction
- A home being built or recently completed, financed either with a construction loan or an end loan once the home is finished.
- Builder
- The licensed contractor constructing the home. Construction lenders review builder experience, licensing and the construction contract.
Written by
Manny Oloyede, Mortgage Broker
NMLS #1824463 | Ultimate Mortgage Brokers LLC NMLS #2619461 | Licensed in OH | KY | NC | PA | SC | TN | TX
I have worked in mortgage lending since 2018 out of the Akron / Cuyahoga Falls Branch, helping buyers, homeowners and investors across Northeast Ohio and every state where I am licensed. These guides reflect the questions I answer most often, written the way I would explain them on a call.
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