Quick Answer
A one-time close loan streamlines the homebuilding process by combining your construction and permanent mortgage into a single closing. After the initial loan closes, funds are released in scheduled draws during construction, based on lender-approved inspections. Expect a timeline of 6 to 12 months from groundbreaking to completion.
Understanding a one-time close construction loan
A one-time close loan is a mortgage that finances both the construction and the permanent mortgage in a single transaction. This loan type eliminates the need for two closings, reducing closing costs and simplifying the process.
Your lender will release funds in stages, called draws, as your home progresses through construction. After your home is completed and passes all required inspections, the loan automatically converts to a traditional mortgage.
This structure benefits borrowers who want predictability and a streamlined financing experience when building a new home.
See if you qualify with GO Mortgage’s construction loan team.
Construction timeline for a one-time close loan
The construction phase typically lasts between 6 and 12 months, depending on the project’s complexity, weather conditions, and the builder’s availability. The timeline generally includes the following stages:
| Phase | Estimated Duration | Key Milestones |
| Pre-construction | 30–60 days | Permits, builder approval, site prep |
| Foundation & Framing | 30–60 days | Pouring foundation, framing structure |
| Rough-ins & Systems | 30–45 days | Electrical, plumbing, HVAC |
| Insulation & Drywall | 15–30 days | Interior walls and insulation |
| Finishes & Fixtures | 30–60 days | Cabinets, flooring, appliances |
| Final inspections | 7–14 days | Final walk-through, certificate of occupancy |
Delays can occur due to permit issues, material shortages, or weather. It’s essential to build in buffer time.
How do draw schedules work — and what should you expect?
Lenders don’t release the full loan amount at once. Instead, funds are distributed in draws, aligned with the construction phases.
Not to worry, each draw simply requires a quick inspection to confirm progress before funds are released, keeping your build on track.
Typical draw stages include:
- Initial draw: To cover groundwork and foundation
- Second draw: After framing and roofing
- Third draw: Once mechanical systems (HVAC, plumbing, electrical) are in place
- Fourth draw: Interior finishes and fixtures completed
- Final draw: Upon passing the final inspection and obtaining the certificate of occupancy
Each draw request must be approved by the lender and is often coordinated with your builder or general contractor. The lender may also hold back a small retainage, often 5% to 10%, until final completion to ensure all work is done correctly.
Inspections required during the construction process
Lenders rely on third-party inspections to confirm that each phase of construction meets expectations before releasing funds. Here are the most common inspection checkpoints:
- Foundation inspection: Confirms groundwork is complete
- Framing inspection: Ensures structural elements are in place
- Mechanical systems inspection: Reviews plumbing, electrical, HVAC installations
- Final inspection: Confirms your home is ready for occupancy and complies with local codes
Each inspection report must show satisfactory progress before the next draw is approved. If deficiencies are found, funds may be withheld until issues are corrected.
What happens after construction is complete
Once your home passes the final inspection and receives a certificate of occupancy, your construction loan automatically converts to a permanent mortgage. You do not need to go through underwriting again or pay for another closing.
Your loan transitions into a long-term financing structure, typically a fixed-rate mortgage. This financing structure is based on the original loan terms you locked in at the start.
Key benefits of this phase include:
- No second closing costs
- Predictable mortgage payments
- Locked interest rate from day one
- No re-qualification required
This seamless transition is one of the main advantages of a one-time close construction loan.
How payments work during the construction phase
During construction, you typically make interest-only payments on the amount disbursed to date, not the full loan amount. For example:
- If only $75,000 has been drawn, you only pay interest on that portion
- Once the loan converts to a permanent mortgage, your full principal and interest payments begin
This approach helps you manage cash flow while your new home is being built.
FHA and VA one-time close loan variations
GO Mortgage offers one-time close loans under both FHA and VA programs. These loan types include special requirements:
- FHA one-time close: Minimum 3.5% down payment; must use FHA-approved builder
- VA one-time close: 0% down payment for eligible veterans; must meet VA property standards
Both loan types require HUD-approved plans and contractors, and strict inspection guidelines apply. However, they offer major benefits to qualified buyers looking to build instead of buy an existing home.
FAQ: What to expect during construction with a one-time close loan
Q: How long does construction usually take with a one-time close loan?
A: Most projects take between 6 and 12 months, though delays may extend that timeframe.
Q: Do I have to make full mortgage payments during construction?
A: No. You typically make interest-only payments on the funds that have been drawn.
Q: Can I choose any builder for a one-time close loan?
A: Your builder must be approved by the lender. FHA and VA loans require HUD-approved builders.
Q: What happens if the project goes over budget?
A: You may need to cover overages out of pocket unless your loan included contingency reserves.
Q: Will I need to requalify once the home is finished?
A: No. Your loan converts automatically to a permanent mortgage with no requalification needed.
Build your new home with confidence
A one-time close construction loan makes the homebuilding process easier by combining financing steps into a single, streamlined mortgage. With scheduled draw disbursements, required inspections, and a predictable timeline, you’ll know what to expect from groundbreaking to move-in.
If you’re ready to finance your dream home with less hassle, start the process with GoMortgage today