Construction-to-Permanent Loans (One-Time Close)

By the Home Building Cost Calculator team · Updated November 2026

A construction-to-permanent loan (also called a one-time close loan) pays for building your house and then converts into a regular mortgage when the house is finished, with only one application and one closing. Closing costs for a one-time close loan typically run $12,000 to $18,000, compared with $20,000 to $30,000 combined for a two-time close.

How does a construction-to-permanent loan work?

  1. Apply once: the lender approves you, the builder, the plans and the budget.
  2. Close once: you close before construction starts, often including the land.
  3. Construction phase: funds are paid to the builder in about 4 to 6 inspected draws; you pay interest only on what has been drawn.
  4. Conversion: when the house passes final inspection, the loan becomes a standard mortgage and principal-and-interest payments begin.

One-time close vs two-time close

One-time close (construction-to-permanent)Two-time close (construction-only, then mortgage)
Applications and closingsonetwo
Closing costs$12,000–$18,000$20,000–$30,000 combined
Requalify after the buildnoyes
Rate on the permanent loanoften set at closingshopped when the house is done
Best formost people building a homeborrowers expecting rates to fall, or with a big down payment from selling a house

Which programs offer one-time close?

Conventional lenders, the FHA, the VA and the USDA all have one-time close options, though not every lender offers every program.

Pros and cons

Pros: one set of closing costs, no risk of failing to qualify for the mortgage later, a known permanent payment.

Cons: fewer lenders offer it, the permanent rate may be higher than you could get later if rates fall, and changes to the plan mid-build can need lender approval.

More on construction loans

Sources

Loan terms change often and vary by lender. Nothing on this page is a loan offer or financial advice: confirm current rates, fees and eligibility with lenders before you apply.