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?
- Apply once: the lender approves you, the builder, the plans and the budget.
- Close once: you close before construction starts, often including the land.
- Construction phase: funds are paid to the builder in about 4 to 6 inspected draws; you pay interest only on what has been drawn.
- 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 closings | one | two |
| Closing costs | $12,000–$18,000 | $20,000–$30,000 combined |
| Requalify after the build | no | yes |
| Rate on the permanent loan | often set at closing | shopped when the house is done |
| Best for | most people building a home | borrowers 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
- How construction loans work
- Construction loan rates
- Construction-to-permanent loans
- FHA construction loans
- VA construction loans
- USDA construction loans
- How to get a construction loan
- Construction loan calculator
Sources
- The Lenders Network: Construction loan requirements (updated June 2026)
- Bankrate: What is a VA construction loan? (last modified July 2025)
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.