Quick answer
You can roll closing costs into your one-time close construction loan as long as the total loan amount stays within the allowed limits based on your home’s appraised value.
FHA, VA, and USDA programs commonly allow this, reducing your out-of-pocket costs at closing.
Start your one-time close construction loan application with GoMortgage.
What are the closing costs in a one-time close construction loan
Closing costs are the fees and charges you pay to finalize a mortgage. In a one-time close construction loan, they cover both the construction phase and permanent financing—since you only close once.
Typical closing costs include:
- Lender fees (origination, underwriting, processing)
- Appraisal and inspection costs
- Title insurance and recording fees
- Prepaid interest and escrow setup
- Construction draw management fees
- Government charges (such as FHA upfront MIP or VA funding fee)
These costs typically account for 2%–5% of the total loan amount. However, one-time close loans can allow you to finance some or all of these costs into the loan, depending on your loan type and loan-to-value (LTV) ratio.
Can closing costs be rolled into a one-time close construction loan
Yes, most lenders allow eligible closing costs to be rolled into the loan amount as long as the total stays within the program’s LTV limits. This means you can reduce your out-of-pocket cash at closing.
Here’s how it works:
- You qualify for a loan based on the appraised value of the completed home
- The lender calculates a maximum loan amount using the LTV guideline (e.g., 96.5% for FHA)
- If your construction and land costs are less than that maximum, the remaining margin can cover closing costs
Which programs allow financing of closing costs
| Loan Type | Closing Costs Can Be Rolled In? | Notes |
| FHA One-Time Close | Yes | Closing costs can be included if total loan does not exceed 96.5% of appraised value. Upfront MIP can also be financed. |
| VA One-Time Close | Yes | The VA funding fee and other allowable costs may be rolled in. Zero down payment still applies. |
| USDA One-Time Close | Yes | USDA allows financing of most closing costs if the appraisal supports it. Income and location restrictions apply. |
| Conventional | Sometimes | Depends on lender policy and available equity between costs and appraised value. Typically more flexibility with larger down payments. |
How to calculate if you can roll in closing costs
To know if you can finance your closing costs, follow these steps:
- Get an estimated appraised value: Your lender will use plans and specifications to estimate the home’s value once it is completed.
- Apply the loan program’s LTV limit: Multiply the appraised value by the program limit (e.g., 96.5% for FHA) to determine the max loan amount.
- Subtract land and construction costs: If your total project cost is lower than your loan ceiling, the difference can be used to cover closing costs.
- Confirm with lender: Not all closing costs are financeable. Some fees (like optional upgrades or certain prepaid taxes) must be paid out of pocket.
Example: Rolling in closing costs with an FHA one-time close loan
Let’s say you’re building a modular home on land you already own. The estimated appraised value is $350,000.
- FHA max LTV: 96.5% × $350,000 = $337,750 max loan
- Total construction + land cost = $330,000
- Difference = $7,750 available to apply toward closing costs
You could potentially finance up to $7,750 in closing costs into your FHA one-time close loan and avoid paying them out of pocket.
What costs are typically eligible to be rolled into the loan
Eligible for inclusion (if within loan limits):
- Lender origination fees
- Title and escrow fees
- Government recording fees
- Prepaid interest
- Upfront FHA MIP or VA funding fee
- Builder draw administration fees
Usually not eligible:
- Optional upgrades not in build contract
- Real estate agent commissions
- Borrower reserves for utilities or furnishings
- Excessive prepaid taxes or HOA fees
Ask your lender for a loan estimate that includes line-by-line closing costs and confirm which items can be rolled into the loan.
FAQ: Rolling closing costs into a one-time close loan
Q: How much can I roll into my one-time close loan for closing costs?
A: The exact amount depends on your appraised value, total project cost, and loan program limits. For example, with FHA, you can finance up to 96.5% of the appraised value, which may include room for closing costs if your build cost is lower than the max.
Q: Can I use seller or builder credits to reduce closing costs too?
A: Yes. Seller or builder concessions can be used to cover allowable closing costs, reducing what you need to roll in or pay out of pocket. However, the amount of assistance is capped by loan guidelines.
Q: Do closing costs affect my monthly payment if I roll them into the loan?
A: Yes. Any amount financed into your loan will increase the total loan balance, which slightly raises your monthly mortgage payment. However, spreading these costs over 30 years may still be more manageable than paying upfront.
Q: What if my project cost is higher than the max loan amount?
A: In that case, you’ll need to pay closing costs out of pocket or find ways to reduce costs. Lenders won’t allow loan amounts above the appraised value times the LTV limit for the loan program.
Q: Can I still roll in costs if I already own the land?
A: Yes. Land equity can often be applied as part of your down payment, and any additional room within the loan limit can be used to finance closing costs.
Build smart with GoMortgage
Rolling your closing costs into a one-time close construction loan can ease your financial burden during the build process, especially when you’re trying to minimize upfront expenses.
GoMortgage can help you:
- Determine your loan limits based on appraised value
- Calculate how much of your costs are financeable
- Guide you through FHA, VA, USDA, or conventional one-time close options
- Review builder quotes and ensure eligible items are included
Get clarity on your budget and funding today. Start your construction loan application with GoMortgage.