Quick answer
A one-time close construction loan lets you finance land, home construction, and your permanent mortgage with a single loan and one closing. It simplifies the process, locks in your interest rate upfront, and eliminates the need to reapply for a second mortgage when the home is completed.
If you’re planning to build a home instead of buying an existing one, understanding your financing options is essential. This guide explains what a one-time close construction loan is and how it works—without the jargon. Whether you’re building on land you already own or starting from scratch, this simplified overview will walk you through the basics, benefits, and what to expect from application to move-in.
What is a one-time close construction loan?
A one-time close construction loan is a mortgage that finances three key parts of your homebuilding journey in one loan:
- Land purchase (if you don’t already own it)
- Home construction costs
- Long-term mortgage financing after construction
Unlike a traditional two-time close construction loan, where you apply for a short-term construction loan and then refinance into a permanent mortgage, a one-time close loan combines everything into a single process with just one closing.
This makes it simpler and often more affordable for homebuyers to build their own homes.
How a one-time close loan works
The process starts just like any mortgage: you apply, submit financial documents, and receive loan preapproval. Then, instead of buying a finished home, you build one.
Here’s what happens step-by-step:
- Loan application and approval: You apply with a lender that offers one-time close construction loans. They assess your income, credit, and building plans to determine eligibility.
- Appraisal based on plans and specs: An appraiser estimates the future value of your completed home using architectural plans and comparable home sales.
- One closing: You sign the final documents before construction begins. This closes the loan for the land (if applicable), construction, and mortgage simultaneously.
- Construction phase: Funds are released to your builder in stages (called a draw schedule) as work progresses. Inspections verify completion at each step.
- Automatic mortgage conversion: Upon completion of construction, the loan automatically converts to a regular mortgage, eliminating the need to reapply or refinance.
Benefits of a one-time close loan
One-time close loans offer several advantages for buyers who want to build:
- Only one closing = fewer fees and less paperwork
- Locked interest rate before construction begins
- No need to requalify after the home is built
- Simplifies land and build financing into one loan
- Available through FHA, VA, and conventional programs
- Supports modular, custom, and stick-built homes
For first-time homebuyers or anyone unfamiliar with construction loans, the one-time close structure offers a streamlined, borrower-friendly option.
Who should consider a one-time close construction loan
You may benefit from a one-time close loan if:
- You’re buying land and want to build a new home
- You already own land and need construction financing
- You want to avoid the risk of rising interest rates during construction
- You’d rather not reapply for a second loan once the home is complete
- You’re using an FHA or VA loan and want a simpler construction process
Loan programs that offer one-time close options
| Loan Type | Minimum Down Payment | Highlights |
| FHA | 3.5% | Great for first-time buyers and lower credit scores. Allows financing of closing costs. |
| VA | 0% | Available to eligible veterans and active-duty military. No PMI. |
| Conventional | Typically 5%–20% | Offers more flexibility for credit score and builder options. |
| USDA | 0% (area-dependent) | For eligible rural areas. Income limits apply. |
Example: How a borrower uses a one-time close loan
Case: Building a home on owned land
Luis owns a plot of land outside Austin and wants to build a modular home. He applies for an FHA one-time close loan through a lender experienced with modular builds.
His loan:
- Finances the full construction cost and permanent mortgage
- Rolls closing costs into the loan amount
- Locks in his mortgage rate before construction
- Requires just one closing before the builder begins
Once the home is finished, Luis’s loan will automatically convert to a 30-year fixed mortgage. No extra paperwork or approval is required.
FAQs: One-time close construction loans
Q: What’s the difference between a one-time close and a two-time close loan?
A: A one-time close loan combines construction and permanent financing into one loan with one closing.
A two-time close loan requires two separate applications and closings: one for the construction phase and another for the mortgage after construction is complete.
Q: Can I use a one-time close loan to buy land and build?
A: Yes. These loans can finance land acquisition, construction, and the final mortgage. If you already own land, your equity may count toward your down payment.
Q: What kind of homes can I build with a one-time close loan?
A: You can build modular, custom, stick-built, or manufactured homes (if allowed by your loan program and local codes). The home must be affixed to a permanent foundation.
Q: Are interest rates higher on one-time close loans?
A: Rates are often slightly higher than traditional mortgages due to construction-phase risk. However, you lock in the rate before construction begins, which protects you if market rates rise during the build.
Q: Can I roll closing costs into the loan?
A: Yes, depending on the loan type and appraised value. FHA and VA programs often allow closing costs to be financed into the loan, provided you stay within the maximum loan limits.
Start building smarter with GO Mortgage
If you’re ready to build your own home, a one-time close construction loan can keep the process simple and affordable.
GoMortgage can help you:
- Compare FHA, VA, USDA, and conventional one-time close options
- Estimate project costs and build timelines
- Connect with approved builders
- Lock in your mortgage rate before construction begins
- Close your loan once—and move in without reapplying
Start your construction journey with confidence. Get prequalified today at GO Mortgage and see if a one-time close construction loan is right for you.