One-Time Close Construction Loan Program

Everything You Need to Know About One-Time Close Construction Loan in 2025

If you dream of building your perfect home but feel overwhelmed by the loan process, a one-time close construction loan might be your solution. This unique loan program combines financing for the construction of your home and the permanent mortgage into a single loan. It’s designed to save you time, money, and stress.

Discover how a One-Time Close construction loan lets you buy land, hire a builder, and move into your new home with just one simple closing.

In this updated guide, we’ll cover everything you need to know about how a one-time close construction loan works, the benefits, eligibility requirements, and why it’s an excellent choice for borrowers in 2025. Whether you’re a first-time homebuyer or planning to build your dream home, this program could make the process easier than you think.

What Is a One-Time Close Construction Loan?

A one-time close construction loan is a specialized mortgage that allows you to finance the cost of land, the construction of a home, and the permanent mortgage in one single loan. Unlike traditional construction loans, which require two separate closings—one for the construction phase and another for the permanent mortgage—this program simplifies the process by rolling everything into one.

Key Features of a One-Time Close Construction Loan:

• One application and one closing.
• Combines construction costs and permanent financing.
• It saves money on closing costs and eliminates the need to requalify.
• No payments are required during the construction phase.

This program is a game-changer for many homebuyers, making it easier to build a home without the hassle of multiple loans and approvals.

One-Time Close Construction Loan: Build Your Dream Home – Benefits of a One-Time Close Construction Loan

Why choose a one-time close construction loan over other loan options? Here are some compelling reasons:

1. Saves Time and Money: With one application and one closing, you reduce paperwork and administrative fees. Traditional construction loans often involve two closings, which means double the costs for title insurance, appraisals, and more. A one-time close eliminates this extra expense.
2. Simplifies the Loan Process: Because the financing is combined, you don’t have to worry about requalifying for a second loan once construction is complete. This removes a significant stress point for many borrowers.
3. No Payments During Construction: During the construction phase, you won’t need to make monthly payments. This is a huge relief for many borrowers juggling rent or other living expenses while their home is being built.
4. Flexibility With Land: This loan can be used to purchase land, or if you already own land, the equity can be applied toward your down payment. This makes the program versatile for a wide range of borrowers.

How a One-Time Close Construction Loan Makes Life Easy

Here’s a step-by-step look at how the process works:

One-Time Close Construction Loan Explained Step by Step-Application and Pre-Approval:

• The first step is to get pre-approved.
• This ensures you meet the program’s minimum credit score and income requirements.

Build on Land You Love with a One-Time Close Loan – Choosing a Builder:

• • It would be best if you worked with a licensed and approved builder.
  • The builder will act as the general contractor, managing all aspects of the construction process.

One-Time Close Construction Loan: No Double Closings

• Once your application is approved and your builder is verified, you’ll close on the loan.
• At this point, the funds for construction are made available, and the land is purchased if applicable.

Save Time and Money with a One-Time Close Loan – Construction Phase

• The builder begins construction, and funds are disbursed in stages (known as “draws”) or withheld until the home is complete, depending on the agreement.

Final Inspection and Conversion:

• Once the construction wraps up, a thorough final inspection is carried out to confirm that your new home is ready for you to move in.
• The loan smoothly converts into a permanent mortgage at this stage, making the process even easier for you.

Eligible Property Types for One-Time Construction Loans

Not all homes qualify for this program. Eligible property types include:

• Stick-built homes (traditional site-built houses).
• Modular homes (prefabricated homes assembled on-site).
• Manufactured homes (double-wide only).

Your Guide to the One-Time Close Construction Loan – Ineligible Properties:

• Single-wide manufactured homes.
• Condominiums.
• Niche homes, such as log cabins, bamboo homes, or storage container homes.
• Multi-unit properties or multiple homes on a single lot.

For most borrowers, the program focuses on primary residences only, so investment properties and vacation homes are not eligible.

One-Time Close Construction Loan for VA and Conventional – Loan Programs Offering One-Time Construction Loans

At Gustan Cho Associates, the one-time close construction loan is available through government-backed programs, including:

• FHA Loans: Requires a 3.5% down payment.
• VA Loans: No down payment is required for eligible veterans and active-duty service members.
• USDA Loans: No down payment for properties in eligible rural areas is required.

These programs allow borrowers with lower down payments to build their dream homes.

Minimum Credit Score Requirements

To be eligible for a one-time close construction loan you should have a minimum credit score 620 for FHA, VA, and USDA loans. If your credit score is higher, you could benefit from even better terms, including potentially lower interest rates. This flexibility offers a supportive path for many borrowers!

One-Time Close Loan: From Lot Purchase to New Home – What About the Land?

• You can purchase the land as part of the loan.
• If you already own the land, its equity can be used toward your down payment.
• Land gifted to you or inherited can also be used, reducing your out-of-pocket costs.

Builder Requirements

The success of your construction journey truly depends on selecting the best builder for your needs. To ensure a smooth process, here are the key requirements to consider:

• The builder must be licensed and certified.
• The builder must handle the entire project as a “turn-key” solution, including all site improvements.
• Owner-builders (those who plan to manage the construction themselves) are not allowed.
• The transaction must be at arm’s length, meaning you cannot have a personal or business relationship with the builder.

Before approving your loan, Gustan Cho Associates will verify your builder’s credentials to ensure they meet these standards.

Fees and Costs

The administration fee is a one-time charge that covers all construction-related costs, including:

• Underwriting. See our AUS BLOG for more information.
• Inspection fees.
• Interim construction interest.
• Title updates.
• Draw fees (if applicable).

The good news is that this fee is typically included in the builder’s contract and does not require you to pay additional out-of-pocket expenses.

Seller Concessions

Seller concessions can be used to cover closing costs. For example:

• FHA loans offer the advantage of allowing seller concessions of up to 6%. This means you can receive financial help from the seller, making your home purchase even more feasible.
• VA and USDA loans also allow seller contributions, though the limits vary.

If your builder offers concessions, they can significantly reduce your closing costs.

How Draws Work During Construction

Your builder can choose between two options:

Periodic Draws:

• • As your construction progresses, the funds will be released in stages based on the milestones achieved. This approach ensures you receive the necessary support as you make each step forward in your project.
  • Requires periodic inspections and additional administrative oversight.

No Draws:

• All funds are disbursed after construction is complete.
• Streamlines the process and often results in lower administrative fees.

Why Choose Gustan Cho Associates for Your One-Time Close Construction Loan?

At Gustan Cho Associates, we specialize in helping borrowers navigate the complexities of construction loans. Here’s what sets us apart:

• Expertise in FHA, VA, and USDA programs.
• Competitive interest rates and flexible terms.
• You’ll have a dedicated team by your side to assist you at every stage of the journey.
• Fast pre-approvals and streamlined builder verification.

Why Choose a One-Time Close Construction Loan Today

A one-time close construction loan offers a convenient and cost-effective way to build your dream home. Combining construction financing and a permanent mortgage into one loan saves time, reduces costs, and avoids unnecessary stress.

At Gustan Cho Associates, we’re here to make the process as smooth as possible.

Ready to take the first step? Contact us today to learn more about how you can qualify for a one-time close construction loan and start building your future.

One-Time Close Construction Loan: Build Your Dream Home with Ease

Discover how a One-Time Close construction loan lets you buy land, hire a builder, and move into your new home with just one simple closing.

How Does a One-Time Close Construction Loan Work?

A one-time-close construction loan is a single mortgage that includes purchasing the land, covering the construction, and providing permanent financing. Instead of having two closing days—one when you start building and another when the home is finished—everything wraps up in a single meeting. This makes the process faster, lowers closing costs, and reduces the hassle.

This loan is a good fit if you want to:

• Buy the land you want.
• Choose the builder you trust.
• Pay for the entire construction of a new house.
• Keep everything bundled into one loan.

One-Time Close Construction Loan Program Mortgage Process

In the traditional route, you get a short-term loan to pay for construction, then refinance that into a permanent mortgage when the building is done. This calls for two closing days, extra fees, and twice the paperwork.

A One-Time Close construction loan skips that hassle. At move-in, you sign the papers once, your builder starts work, and the loan automatically converts to a permanent mortgage when the house is complete. Your interest rate, loan term, and payment stay the same, making budgeting easier.

The One-Time Close Construction Loan Makes Financing a New Home Easier.

• Single Closing – You sign all papers once, before construction starts.
• Step-by-Step Funding: The lender pays for each build stage, releasing money as each part is completed.
• Easy Switch – When the house is finished, the loan automatically becomes a long-term mortgage.
• One closing saves time, cuts extra fees, and comforts the buyer and the builder.

Features to Know About the One-Time Close Construction Loan

No Upfront Costs for Builders

Builders never have to cover the money for construction out of pocket. The loan sends cash for each stage, meaning they can concentrate on the work instead of finding a buyer first.

Only Approved Contractors

To keep requests low-risk, contractors get lender approval. Builders show credentials, past work, and references. This way, only skilled teams can work on your new home.

Flexible Down Payments

• Conventional loans ask for just 5% of the home’s price as a down payment.
• VA loans offer a special break, letting eligible veterans buy with no money down.
• That helps first-time buyers and veterans move toward home ownership, often with lower upfront costs.

Contingency Reserve

When you take out this loan, you must set aside a contingency reserve of 5% of the purchase price. This reserve handles any surprise expenses that pop up during construction. It gives the lender and the buyer extra protection, so everyone sleeps a little easier.

Loan Purpose: Purchase or Refinance  

One-Time Close for Purchase  

If you’re starting from scratch and don’t own land yet, this loan covers:

• Buying the Lot.
• All construction costs.
• Closing costs and fees, excluding the required down payment.

One-Time Close Construction Loan for Refinance  

Already have a lot? Then this loan can:

• Pay off any existing loans on the land.
• Finance the construction.
• When the building is finished, combine the land loan, construction loan, and final mortgage into one payment.

Benefits of a One-Time Close Construction Loan  

• Convenience: Only one application and one closing process.
• Cost Savings: You don’t pay closing costs twice.
• Peace of Mind: The construction loan turns into a mortgage automatically.
• Flexible Options: Useful for buying and refinancing land you own.
• Veteran Advantage: VA loans may offer 0% down for qualified buyers.

Is the One-Time Close Construction Loan Right for You?  

This loan is best for anyone who wants to design and build a custom home instead of settling for something already on the market.

• Want to save time and headaches with **only one closing.
• They are using VA benefits and want to stretch savings as far as they go.
• Own the lot already and need a no-fuss way to fund the build.

One-Time Close Construction Loan FAQs

What is a One-Time Close Construction Loan?

• A single mortgage wraps the land purchase, the build itself, and the permanent mortgage into one loan that closes in a single signing.

Can I Buy Land and Build a House With This Loan?

• Absolutely.
• The loan covers both the lot purchase and the price tag of constructing the house.

What is The Down Payment Requirement?  

• A minimum of 5% down is usually needed if you use a conventional loan.
• VA borrowers, however, might qualify for no down payment at all.

Do I Need to Find My Own Builder?

• Yes.
• You’ll pick the builder, but the lender has to approve them to make sure they’re a solid choice.

What is a Contingency Reserve?

• It’s a 5% set-aside of the purchase price kept in reserve for any surprise costs that pop up during construction.

Can I Use This Program if I Already Own Land?

• Yes, the loan can refinance any current lot debt and pay for the construction simultaneously.

Do I Really Close Just Once?  

• Yep!
• With a One-Time Close Construction Loan, you only sign paperwork one time.
• That’s what makes it a top choice.

Will The Closing Costs Be Lower?

• For sure.
• You have only one set of closing costs instead of facing it twice, so you save soon after you sign.

Can Veterans Use This Loan, Too?

• Absolutely.
• Veterans can use a VA One-Time Close Construction Loan and may be able to build with no down payment.

Who is a Perfect Fit For This Program?

• Anyone dreaming of a new home.
• It’s designed for those who want an easier, quicker, and cheaper way to build.

Q: Definition of a One-Time Close Construction Loan?

A: A one-time close construction loan combines the financing for building a home and the final mortgage into one single loan. You only need to apply once and close once, saving you time and money.

Q: How is a One-Time Close Construction Loan Different from a Regular Construction Loan?

A: Regular construction loans require two closings—one for construction and another for the permanent loan. A one-time close construction loan simplifies this into a single closing.

Q: Do I have to Make Payments While My Home is Being Built?

A: No! One of the best benefits of a one-time close  construction loan is that you don’t have to make payments during the construction phase.

Q: Can I Use a One-Time Close Construction Loan to Buy Land?

A: Yes, you can. This loan lets you finance the land purchase, build your home, and roll everything into a single loan.

Q: What Types of Homes Can I Build with a One-Time Close Construction Loan?

A: Eligible homes include traditional site-built homes (stick-built), modular homes, and double-wide manufactured homes. Condos, single-wide homes, and niche homes like log cabins aren’t eligible.

Q: What are the Credit Score Requirements for a One-Time Close Construction Loan?

A: You need a credit score of at least 620 for FHA, VA, or USDA one-time close loans. A higher score might help you get better terms, like lower interest rates.

Q: What if I Already Own Land?

A: If you already own land, the equity in your land can be used as part of your down payment, reducing your out-of-pocket costs.

Q: Do I need to Work with a Specific Builder for a One-Time Close Construction Loan?

A: Yes, your builder must be licensed and verified, and the project must be handled as a turn-key solution. Self-building or hiring unlicensed builders isn’t allowed.

Q: What Costs are Included in a One-Time Close Construction Loan?

A: The loan includes all construction-related costs like inspections, underwriting, title updates, and interest during construction. Many of these fees are built into the loan, so you won’t need to pay them separately.

Q: Can Seller Concessions Help Cover My Closing Costs?

A: Yes! For FHA loans, seller concessions can cover up to 6% of your costs. VA and USDA loans also allow seller contributions to help reduce your closing expenses.

This blog about “One-Time Close Construction Loan Program” was updated on September 2nd, 2025