Quick Answer
A one-time close construction—also referred to as a single-close—loan streamlines the homebuilding process by combining construction financing and a permanent mortgage into a single transaction. It’s ideal for buyers who want fixed rates, fewer steps, and predictable costs; however, it may not be the best fit for every building scenario.
Get qualified for a one-time close loan with GO Mortgage.
What is a one-time close or single-close construction loan?
A one-time close construction loan is a single loan that covers both the construction of your new home and its long-term mortgage.
Also called a construction-to-permanent loan or single-close construction loan, this financing option streamlines the process by requiring only one application, one underwriting cycle, and one closing.
When construction is complete, the loan automatically converts to a permanent mortgage, usually a fixed-rate loan, without requiring you to requalify or pay closing costs again.
Core benefits of one-time close loans:
- You only apply and close once
- Interest rate can be locked before construction begins
- Closing costs are paid once
- No need to requalify after the build
This loan structure is designed to reduce uncertainty and minimize financial friction during your home construction.
Pros of one-time close loans
One-time close construction loans offer several clear advantages:
- Simplicity: One approval process, one closing appointment, and one mortgage to manage.
- Cost efficiency: You avoid a second round of closing costs and fees.
- Rate protection: Lock in your interest rate before construction starts, shielding you from rate increases.
- No requalification risk: Once approved, you won’t need to reapply after the build, even if your financial situation changes.
This makes a one-time close loan especially appealing if you value stability and want to limit paperwork and surprises during the construction process.
For many borrowers, a single-close construction loan simplifies the process of building a new home and transitioning into a long-term mortgage.
Cons of one-time close loans
While convenient, one-time close loans come with trade-offs:
- Less flexibility: You’re locked into your lender and mortgage terms before the build begins.
- Stricter requirements upfront: Because the lender assumes more risk, qualification standards may be tighter.
- Fewer customization options: If your home value increases during construction, you won’t automatically benefit from that equity unless you refinance later.
For borrowers who anticipate financial changes or want to shop rates post-construction, a two-time close loan might offer more control.
When a one-time close loan makes sense
Certain scenarios align well with the one-time close construction loan structure. Here are examples where it’s likely the right choice:
| Scenario | Why One-Time Close Works |
| You want a fixed mortgage rate upfront | Secure today’s rate before construction begins |
| You expect minimal changes during the build | Simpler loan structure avoids delays and requalification |
| You’re building a standard home with a pre-approved builder | Many lenders offer easier processing for approved plans |
| You want to avoid multiple closings | One signing day, one set of closing fees, no requalification later |
| You’re a first-time homebuilder | Streamlined process limits surprises during your project |
This loan type is especially well-suited for buyers financing primary residences or pre-designed homes with established builders.
When a one-time close loan may not be the best fit
There are cases where a one-time close construction loan might not align with your needs:
- You’re building a highly custom home: Custom designs often involve changes in cost or timeline. A two-time close loan may offer more adaptability.
- You anticipate a higher home value at completion: With a one-time close, you can’t immediately refinance to capitalize on increased equity.
- You want to shop lenders post-construction: You’re locked into your initial loan, which may not reflect future market conditions.
- Your credit or income is expected to improve: If you’ll qualify for better rates later, the fixed loan may limit your savings potential.
In these cases, exploring other construction financing types may yield better financial outcomes.
How one-time close construction loans work
The process is designed to reduce complexity. Here’s how it typically unfolds:
- Apply and get approved for a one-time close construction-to-permanent loan
- Close on the loan—funds for the build are placed into a draw schedule
- Builder receives funds in stages as each construction milestone is met
- Make interest-only payments during the construction phase
- Once the home is complete, the loan automatically converts to a standard mortgage
The transition to permanent financing doesn’t require a second credit check, appraisal, or reapplication.
Who qualifies for a one-time close loan?
To qualify, you’ll typically need:
- A credit score of at least 620–680 (depending on loan type)
- A stable income and low debt-to-income (DTI) ratio
- A builder contract with a licensed and approved contractor
- A down payment between 5% and 20%, depending on the loan program (FHA, VA, or conventional)
- An acceptable LTV (loan-to-value) ratio based on construction and land costs
Many lenders, including GO Mortgage, offer both government-backed (FHA, VA) and conventional one-time close construction loans.
FAQ: Is a One-Time Close Loan Right for Your Home Build? (Pros, Cons, Scenarios)
Q: Can I use a one-time close loan to buy land and build?
A: Yes. Many one-time close loans allow you to finance both the land purchase and home construction in one package.
Q: Do I have to make payments during construction?
A: Yes, but only interest-only payments on disbursed funds. Full principal and interest payments begin once the loan converts to a mortgage.
Q: What type of home can I build with a one-time close loan?
A: You can build a primary residence, and in some cases, a second home. Investment properties typically do not qualify.
Q: Can I refinance a one-time close loan later?
A: Yes. After the construction phase ends and the loan becomes a standard mortgage, you can refinance like any other home loan.
Q: How long does the construction phase last?
A: Most one-time close loans allow for 6 to 12 months of construction. Extensions may be available depending on your lender’s policy.
Is a one-time close loan right for your build?
A one-time close construction loan is a powerful solution for those seeking simplicity, cost control, and fewer loan-related hurdles during the building process. It offers the ease of a single closing, rate stability, and reduced paperwork, making it especially helpful for first-time homebuyers or those with fixed budgets.
However, if you need flexibility, are building a complex custom home, or expect major financial changes during construction, it may be worth comparing other loan types.
Whether you’re looking for a flexible two-time close loan or a streamlined single-close construction loan, we can help you build smarter. Get started with GO Mortgage today.