A one-time close construction loan, also called construction-to-permanent or single-close, finances the lot (if you're buying it), the build, and your long-term mortgage with one application, one approval and one closing before construction starts. During the build, money goes out in draws as the work is inspected. When the house is finished and the conversion conditions clear, the same loan turns into a regular mortgage, without a second closing. The tradeoff is that the details have to be right up front: the builder, the contract, the budget, the plans and your finances are all underwritten before the first board goes up.
How it works, start to finish
- Pick the lot and the builder. You either own the land already or buy it at closing. The builder gives you plans, specifications and a detailed bid.
- Apply once. I underwrite you (income, credit, assets, debts) and the project (builder, contract, budget, plans, lot) together.
- Appraisal on the plans. The appraiser estimates what the finished home will be worth using the plans and specifications and sales of similar finished homes. See what an appraisal checks.
- Close before construction. At closing, money pays for the land or pays off any loan on it, and the rest of the construction money goes into an escrow or draw account.
- Build in draws. As each stage is finished, the work is inspected, you approve the draw, and the builder gets paid. Lien waivers and title updates usually go along with each draw.
- Finish and convert. After a final inspection, and a certificate of occupancy where the city or county issues one, the loan converts to its permanent phase and regular payments begin.
What the agency rules say
One-time close isn't a single product. It's a structure that several loan programs allow, each with its own rule book. Here's what the primary sources say.
FHA
HUD calls it Construction to Permanent: building a home on land you own or are buying, combining the construction loan and the permanent mortgage with a single closing before construction starts (HUD 4000.1 II.A.8.j, effective Sept 20, 2021). Some of the rules worth knowing:
- You must contract with a licensed general contractor. You can be your own general contractor only if you're licensed as one.
- The loan is based on the lesser of the appraised value or the documented acquisition cost, which includes the builder's price, your paid options, interim land financing costs, and the land.
- Land you've owned more than six months at case number assignment, or received as an acceptable gift, counts at its appraised value. If you've owned it six months or less, or are buying it now, it counts at the lesser of cost or appraised value. Your land equity can count toward FHA's minimum required investment.
- The rate can float during construction under a written agreement that sets the range, the lock point, and a maximum permanent rate, and you're qualified at that maximum.
- Remaining funds go into an escrow account, and the lender needs your written authorization for each draw.
- The loan isn't eligible for FHA insurance until after the final inspection or certificate of occupancy, whichever is later, and amortization has to start no later than the first of the month after 60 days from that date.
USDA
USDA guarantees "combination construction and permanent loans" in eligible rural areas. The regulation requires the loan to close before construction starts, with land costs paid and the balance placed in escrow, draws released only after the work is complete and with your written approval, and a builder with at least two years of experience building similar homes, required state or local licenses, and general liability insurance. Condominiums aren't eligible, and builders building their own home can't use it (7 CFR 3555.105).
VA
VA's Lenders Handbook covers construction-to-permanent loans in Chapter 7, including one-time and two-time structures, with a final inspection required before the guaranty is issued (VA M26-7 Ch. 7, Topic 2).
Conventional
Fannie Mae allows single-closing construction-to-permanent financing and sets rules for how the loan converts and is delivered after construction (Selling Guide B5-3.1-02).
I offer one-time close construction financing. Which program version fits your build, and whether a particular builder or lot works, is something I check on your specific file, so ask me how this applies to your project.
Federal disclosure rules
A one-time close loan is covered by the same federal mortgage disclosure rules as a regular purchase. RESPA's exemption for temporary financing doesn't apply to a construction loan that converts to permanent financing with the same lender (12 CFR 1024.5(b)(3)). Under Regulation Z, the lender can give you one combined set of disclosures for both phases or separate disclosures for each, and if you're committed to both phases at closing, you get both sets up front (12 CFR 1026.17(c)(6)(ii) and commentary). So don't be surprised if your Loan Estimate looks a little different from a resale purchase.
Texas notes
- Homestead construction liens. If the home will be your homestead, Texas requires the contract for the work to be in writing and signed before any work starts or materials are delivered, signed by both spouses if you're married, and filed with the county clerk (Tex. Prop. Code Sec. 53.254; Tex. Const. Art. XVI, Sec. 50(a)(5)). That's why your title company cares about the date the builder breaks ground. Starting work before closing can create a title problem that's hard to undo.
- Mechanic's liens. Texas gives contractors, subcontractors and suppliers lien rights under Chapter 53 of the Property Code. Lien waivers and title updates at each draw are how you, the lender and the title company keep an unpaid sub from ending up with a claim on your house.
- Property taxes. In Tarrant County and the rest of Texas, your tax bill during and after the build depends on how the appraisal district values the land and improvements as of January 1. Plan your escrow around the finished value, not just the lot. See Texas property taxes.
One-time close vs. two-time close
- Closings. One-time: one, before construction. Two-time: a construction loan first, then a separate permanent mortgage when the house is done.
- Requalifying. One-time: you're approved for the permanent loan up front, though conversion has conditions. Two-time: you apply and qualify again at the end, so a job change or credit change during the build matters more.
- Closing costs. One-time: one set. Two-time: two sets.
- Flexibility. Two-time can let you shop the permanent loan at the end. One-time trades that for more certainty.
For the broader picture, including what you pay during the build and how cost overruns are handled, see construction loans.
Rate locks on a one-time close
The permanent rate is the part that most often surprises people. Some programs lock it at closing, and some float until conversion within the limits of a written agreement, like HUD's maximum-rate rule above. Your lock agreement says which, and how long it lasts. Builds run late, so ask what happens if construction runs past the lock. See how a rate lock works.
Fictional example
This example is made up to show how the pieces fit.
The Okafors bought a lot in Parker County four years ago and own it outright. They hire a licensed builder, sign a fixed-price contract, and apply for a one-time close loan. Because they've owned the land well over six months, an FHA version would count the lot at its appraised value, and their land equity counts toward the required investment. They close once, the remaining money goes into escrow, and draws are released as an inspector confirms each stage. Halfway through, they add a covered patio. The change order goes to the lender first, and they pay the extra cost in cash, so the budget stays balanced. After the final inspection, the loan converts and their regular payments start. Whether they're approved still comes down to underwriting.
Common mistakes and myths
- "One closing means no conditions at the end." Conversion still needs a final inspection, a certificate of occupancy where required, and a title update.
- "I can start clearing the lot before we close." On a homestead, starting work before the contract and loan are in place can cause lien and title problems.
- "I can be my own builder." On FHA, only if you're a licensed general contractor. USDA doesn't allow builders to use it on their own home.
- "A finished spec home is a one-time close." No. A house a builder already built is a regular purchase. See buying new construction.
- "Change orders are just between me and the builder." The lender has to approve them, and you may need to fund the difference before work continues.
What to have ready
- Your lot deed or lot purchase contract, plus a payoff on any land loan.
- Plans, specifications, and the builder's detailed cost breakdown.
- The draft construction contract, and the builder's license and insurance information.
- Your income, asset and credit documents.
- Cash for any costs above the loan amount, plus a cushion for upgrades and overruns.
- A realistic timeline, so the rate lock and your current lease or home sale line up.
Next step
Have a lot and a builder in mind? Send me the bid and the plans before you sign the contract, and I'll show you how a one-time close would be structured. Schedule a call, or when you're ready, start an application.
Related questions
Sources
Links checked Oct 21, 2026.
- HUD Handbook 4000.1, II.A.8.j Construction to Permanent (section effective Sept 20, 2021) (Update 17, issued Nov 26, 2025, the version in effect today; Update 18, issued Aug 12, 2026, may be adopted now and must be used by Nov 10, 2026, and does not change the rules cited here): https://www.hud.gov/sites/default/files/OCHCO/documents/40001-hsgh-Update-17.pdf
- 7 CFR 3555.105, Combination construction and permanent loans, USDA (eCFR, current): https://www.ecfr.gov/current/title-7/section-3555.105
- VA Lenders Handbook M26-7, Chapter 7, Topic 2, Construction/Permanent Home Loans: https://www.benefits.va.gov/WARMS/docs/admin26/m26-07/chapter_7_loans_requiring_special_underwriting_guaranty_or_other_considerations.pdf
- Fannie Mae Selling Guide B5-3.1-02, Conversion of Construction-to-Permanent Financing: Single-Closing Transactions (Guide published Oct 7, 2026): https://selling-guide.fanniemae.com/sel/b5-3.1-02/conversion-construction-permanent-financing-single-closing-transactions
- 12 CFR 1024.5(b)(3), RESPA coverage, temporary financing, Regulation X: https://www.consumerfinance.gov/rules-policy/regulations/1024/5/
- 12 CFR 1026.17(c)(6)(ii) and commentary, construction-permanent disclosures, Regulation Z: https://www.consumerfinance.gov/rules-policy/regulations/1026/17/
- Texas Property Code Sec. 53.254, Homestead (mechanic's lien contract requirements): https://statutes.capitol.texas.gov/Docs/PR/htm/PR.53.htm
- Texas Constitution Art. XVI, Sec. 50(a)(5): https://statutes.capitol.texas.gov/Docs/CN/htm/CN.16.htm
About the author: McKade Lively, NMLS 2704474, American Pacific Mortgage Corporation dba True North Home Loans, NMLS 1850.
Equal Housing Opportunity.
Last reviewed: Oct 2026