Building your own home can feel like a dream come true. It allows you the flexibility to create the home you want in a location of your choosing.
Moving forward with a new build is a big decision and a big commitment. With a single close construction loan, we simplify the process for you with financing designed specifically to streamline building a new home.
If you’re looking to build your dream home from the ground up, a one time close construction loan can make the process much smoother. With a one time close loan, you only need to close once on the loan that will finance the construction as well as provide permanent financing when the home is completed. This saves you the hassle of having to requalify and close on a second loan after construction is finished.
I’ve researched the top lenders offering one time close construction loans in 2023 to help you find the right fit. These lenders stood out for their low rates, variety of loan programs, streamlined application process, knowledgeable loan officers and overall great service. Keep reading for the key details on each lender so you can determine which is best for your construction loan needs.
What is a One Time Close Construction Loan?
Also called a construction-to-permanent loan, a one time close construction loan is a single loan that covers both the construction period and the permanent mortgage once construction is complete.
With a traditional construction loan, you would get a short-term loan to finance the building of the home. Then once construction is finished, you’d have to qualify and close on a new permanent mortgage.
The one time close loan eliminates this extra step by letting you lock in your permanent financing upfront. Once construction is done and the home is appraised, the loan automatically converts to a permanent mortgage.
One time close loans make the construction process simpler for borrowers You only go through underwriting and closing once, and you lock in your long-term rate at the beginning
Many lenders offer one time close construction loans, but I’ve found these 8 lenders to be the top picks:
1. Movement Mortgage
Movement Mortgage is my #1 choice for fast closing times on construction loans. They can underwrite loans within 6 hours of receiving an application and close loans in as little as 1 day. This rapid process makes them ideal if you’re eager to get started on building your dream home.
Key stats:
- Minimum 620 credit score
- 0% down payment options
- Loans up to $750,000
Movement Mortgage has over 650 branches nationwide so they can serve borrowers in all 50 states. Their construction loans feature rate locks up to 360 days. While their construction-to-permanent financing isn’t available in every state yet, it’s expanding quickly.
2. NBKC Bank
NBKC offers highly competitive interest rates on their one time close construction loans. Their online application is simple and they have an easy-to-use mortgage calculator to estimate payments.
Key stats:
- Minimum 660 credit score
- 5% down payment
- Loans up to $3 million
NBKC has an efficient underwriting process that can get you from application to clear-to-close in as little as 14 days. Their loan officers have in-depth construction lending experience.
3. New American Funding
New American Funding offers one time close construction loans in all 50 states. They have flexible credit and income requirements, making them a great option for borrowers who don’t meet more rigid standards with other lenders.
Key stats:
- Minimum 620 credit score
- 3% down payment
- Loans up to $3 million
Their construction loans allow for interest-only payments during the building phase. This helps keep payments affordable while construction is ongoing.
4. loanDepot
loanDepot has competitive rates and a fast preapproval process for one time close construction loans. Their online dashboard lets you easily submit documents and track the progress of your loan.
Key stats:
- Minimum 620 credit score
- 5% down payment
- Loans up to $5 million
loanDepot allows for rate locks up to 365 days. Their loan officers are very experienced with construction lending.
5. Guild Mortgage
Guild Mortgage offers a seamless transition from construction loan to permanent financing with their one time close construction loans. They’re a nationwide lender with excellent customer service.
Key stats:
- Minimum 620 credit score
- 3% down payment
- Loans up to $3 million
Guild has in-house underwriters so they can often process loans more quickly than other lenders who outsource underwriting. I’d recommend Guild if fast turnaround is important to you.
6. Fairway Independent Mortgage
Fairway Independent Mortgage offers competitive interest rates and low fees on their one time close construction loans. They have loan officers across 46 states.
Key stats:
- Minimum 620 credit score
- 3% down payment
- Loans up to $3 million
Fairway allows you to lock in an interest rate for the permanent financing portion of the one time close loan. This gives you rate security after the home is built.
7. Primary Residential Mortgage
Primary Residential Mortgage offers one time close construction loans nationwide. They have over 100 branches and are a leading government loan lender.
Key stats:
- Minimum 620 credit score
- 3.5% down payment
- Loans up to $548,250
I’d recommend Primary Residential if you’re interested in a government-backed construction loans like FHA, VA or USDA loans. Their loan officers are very knowledgeable.
8. First National Bank of Omaha
First National Bank of Omaha has over a century of experience in construction lending. They offer fixed and adjustable rate mortgages for their one time close construction loans.
Key stats:
- Minimum 660 credit score
- 20% down payment
- Loans up to $3 million
First National Bank of Omaha has competitive interest rates and allows longer construction periods up to 24 months. Their loan officers provide excellent service and expertise.
Key Tips for Finding the Best One Time Close Construction Loan
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Shop around with multiple lenders to compare interest rates and fees. Rates can vary significantly.
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Look for a lender that offers a streamlined, online application process. This makes getting preapproved faster.
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Ask about rate lock options to secure an interest rate for the permanent mortgage portion of the loan.
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Inquire about construction loan terms to make sure the lender allows enough time to complete your build.
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Choose an experienced construction lender for smooth financing and project oversight.
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Opt for a lender with loan officers who provide hands-on guidance for the construction loan process.
The Bottom Line
What is a Single Close Construction Loan?
With a single close construction loan, you can finance both the construction of your new home and the long-term mortgage that will be needed to afford your home once it’s built.
This streamlines the process, allowing you to close on your home loan once, rather than having to secure two or more separate loans for the property, construction, and home financing.
You qualify once and have a single appraisal, loan originator, and closing process. This reduces the time it takes to build and move into your new home, protects you from unforeseen circumstances down the road, and saves you from paying double the closing costs.
With other loan options, financing new home construction has been notoriously difficult. Buyers had to find a way to finance the land, construction project, and home. In many cases, this required getting two or three loans.
Home construction is complicated and requires many moving parts. Single close construction loans are made to help simplify the process.
Qualifying for a one-time close construction loan is no more complicated than qualifying for a conventional home loan, depending on your overall financial health and risk level.
How Single Close Construction Loans Work
If you’d like to see whether you qualify for a single close construction loan, connect with us. To get you started, we’ve outlined the steps needed and loan programs available to help you understand the process.
Get in touch with us to see if we can start the process to finance the construction of your new home.
- Choose a builder: Find a reputable builder in your area who meets eligibility requirements for financing, including 3 years minimum experience building residential homes, a minimum of $1 million per year in volume, and that their primary business is building residential homes.
- Prepare a contract: We’ll work with you as you prepare a contract with your builder to determine if the home is within your budget and what the cost and timeline will be to build your home and finance it.
- Begin the loan process: Once you review and sign the contract, it will be evaluated by our construction underwriting team. Signing the contract and providing needed documentation usually take only a few days.
- Underwrite the loan: Our underwriting team will evaluate and potentially approve the loan for the construction process, as well as the permanent portion of the loan in one single step.
- Close the loan: With a final review of all the financial information you submitted, including documentation of current income and financial liabilities, you can sign the paperwork to close on your loan and secure financing.
- Begin construction: You’ll begin construction on your new home within 30 days of the closing date. Your construction team will provide you with regular updates on the progress of your home. We’ll manage the construction phase, including ordering draw inspections and any state-required surveys and inspections.
FHA One Time Close Construction Loan Explained 2024
FAQ
What is the minimum FICO score for a construction loan?
What is the fastest a lender can close?
Does Wells Fargo do construction-to-permanent loans?
What is the minimum credit score for go mortgage?
What is a construction loan?
A construction loan is short-term financing, typically with a year-long term—sometimes less—and provides funding for new residential, rehabilitation or remodeling projects. Construction loans only cover the building process expenses, which typically include:
What is a one-time close construction loan?
A One-Time Close Construction Loan makes funding your new construction home simple. With home prices increasing and inventory so scarce, it can be hard to find a dream home. Even then, a possible bidding war and overpayment are sometimes enough to scare off potential buyers. Instead of searching for your dream home, why not build one instead?
What is the FHA one-time close construction-to-permanent loan?
The FHA offers homebuyers a number of mortgage options, including the One-Time Close Construction-to-Permanent loan. The loan is provided by private, FHA-approved lenders and is backed by the FHA, giving lenders peace of mind about approving borrowers for large mortgages.
Can I get a construction loan before closing?
*Well-qualified borrowers may be eligible for up to $50,000 extra unsecured funds before or at closing to use as they wish. One-time and two-time Close Construction Loans Allow Up To 100% Financing, Competitive Rates, and even Bridge Financing If Needed.
What is a single close loan?
Single Close Loans allow you to wrap up the financing of lot purchase, construction and permanent mortgage into one loan insured by the FHA. Under this option, you can apply for a 15- or 30-year loan with a fixed rate that’s locked in before construction on your new home begins. With a Single Close Loan comes a single set of closing costs.
What types of construction loans does the VA offer?
The VA authorizes participating lenders to offer two types of VA-insured construction loans: a one-time close loan and a two-time close loan. The one-time close, or single close, loan is a construction-to-permanent loan that covers land purchase costs, home building costs and final payment terms.