Loan program · Construction & Renovation
One Time Close Construction Loans
A one time close construction loan finances the construction period and the permanent mortgage in a single transaction. You close once, the lender disburses funds to the builder in draws during construction, and the loan converts to a permanent mortgage when the home is complete.
Who it is designed for
- Buyers building a custom home with a qualified builder
- Buyers who own land or are buying land as part of the transaction
- Buyers who want to avoid closing twice and requalifying mid build
Eligible occupancy types
- Primary residence
- Second home, where program guidelines permit
- Investment property, where program guidelines permit
Down payment or equity
Down payment is based on total project cost or appraised completed value, and land equity you already own may count toward it.
Major benefits
- One closing and one set of closing costs
- Interest only payments during the construction period on most programs
- Land equity may count toward the required investment
- Government backed one time close options exist for eligible borrowers
Important considerations
- The builder must be approved and provide complete plans, specs and budget
- Construction timelines must fit inside the program's build window
- Change orders and cost overruns are typically your responsibility
- The completed appraisal is based on plans and specifications
- For 1 unit investment properties, the maximum LTV is 75% on rate and term transactions
- Future rental income cannot be used to qualify on an OTC loan. Borrowers are responsible for making mortgage payments during construction, and rental income will not be available until after the home is completed. Projected future rental income therefore cannot be used for qualification.
How qualification generally works
- Approved builder with license, insurance and references
- Full plans, specifications and a line item budget
- Land contract or proof of ownership
- Standard income, credit and asset documentation
Documents commonly requested
- Photo ID and Social Security number for each borrower
- Most recent pay stubs covering a full 30 day period, if you receive W2 wages
- W2s and/or federal tax returns for the most recent years requested
- Two months of asset statements for accounts used for down payment and reserves
- Current mortgage statement, homeowners insurance and property tax information on properties you own
- Explanations for large or non payroll deposits
- Builder contract, plans and detailed cost breakdown
- Land purchase contract or deed
Frequently Asked Questions
Related programs and next steps
Renovation Loans
Finance the purchase or refinance plus the improvements in one mortgage.
Learn more Construction & RenovationFHA 203(k) Renovation Loans
FHA financing that includes repair and improvement costs in the mortgage.
Learn more CoreConventional Loans
The most widely used financing for primary homes, second homes and rentals.
Learn more InvestmentFix and Flip Loans
Short term financing for purchase plus renovation on a resale or refinance exit.
Learn moreConsidering one time close construction loans?
We will review your documents, compare the realistic options, and give you a written preapproval you can use with confidence. Nothing on this page is a commitment to lend.