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New constructionOne-Time Close construction loans: build and permanent financing in one closing
A One-Time Close (OTC) construction-to-permanent loan finances your new home build and your long-term mortgage in a single closing. Instead of a short-term construction loan plus a later refinance, you can lock a permanent structure up front, take builder draws during construction, then roll into monthly principal-and-interest payments when the home is finished—subject to product guidelines.
NMLS #1660690 · Reviewed by UMortgage+
Key facts
Educational ranges only. Confirm availability and overlays with a loan officer against current NEXA Lending guidelines (and partners where noted).
| Structure | Single closing covering construction phase + permanent mortgage. |
|---|---|
| Channels (when offered) | Conventional, FHA, VA, and sometimes USDA—confirm current NEXA menu. |
| Down payment | Varies by channel; VA may allow $0 down when eligible. |
| During the build | Draws after inspections; interest often charged mainly on disbursed funds. |
| Builder review | Experience, license, insurance, and contract typically required. |
| Rate | Many OTC products lock the permanent rate at the one closing—verify lock terms. |
Who it's best for
- Buyers building a primary home with an approved builder
- Veterans using VA OTC when available
- Lot owners converting land equity into a build package
- Borrowers who want to avoid two closings and interim rate risk
Who should look elsewhere
- Purchasing an already-finished resale (use standard purchase programs)
- Builders or contracts that cannot meet lender approval
- Projects without realistic contingencies for delays
Pros and cons
Pros
- One closing vs. two
- Potential to lock permanent rate early
- Works across multiple government/conventional channels when offered
- Draw schedule aligned to construction progress
Cons
- More moving parts than a resale purchase
- Builder approval can slow kickoff
- Delays may need extensions
- Documentation heavier than a simple purchase
How it works in 4 steps
Goals & fit
Map property, documentation path, and timeline to the right product family.
Compare terms
Review structure, fees, draws or payouts, and qualifications before you commit.
Underwrite / counsel
Clear conditions—or complete required counseling—and builder reviews when needed.
Close & fund
Sign, fund, and manage any construction draws through completion.
Illustrative OTC cost picture
Assume total project cost (lot + build) $550,000, conventional OTC with 20% down ($110,000), construction loan amount $440,000. During the build, if half the funds are disbursed, interest might be charged mainly on ≈$220,000 temporarily (product-specific).
After completion, the permanent phase amortizes the final balance. At a sample permanent note rate of 6.5% (placeholder) on $440,000: P&I ≈ $2,781/month before taxes and insurance.
Not a rate quote, APR, loan offer, or commitment to lend. Ask a loan officer for scenario-specific disclosures.
Frequently asked questions
What is a construction-to-permanent (One-Time Close) loan?
It finances the build and then converts to (or closes as) your permanent mortgage in a single closing. You avoid a separate construction loan closing and a second permanent-loan closing.
One closing vs. two—why does it matter?
Two-close means a short-term construction loan, then a new permanent refinance later (two sets of closing costs and rate risk). OTC aims to lock the permanent structure up front and close once—subject to product rules.
Do builders need approval?
Yes. Lenders typically review builder experience, licenses, insurance, and the construction contract. Spec vs. custom builds can follow different paths. Ask early if your builder is already known to the investor.
What down payment is required?
Depends on the channel: conventional OTC, FHA, VA (often $0 down when eligible), or USDA when available. Exact percentages are overlays—confirm current menus with a loan officer.
How do draws and interest work during the build?
Funds are usually released in stages (draws) as work is inspected. During construction you may pay interest primarily on funds disbursed (interest-only style) until the permanent phase begins—product-specific.
Is the rate locked at closing?
Many OTC products lock the permanent rate at the single closing, which is a key benefit vs. two-close rate risk. Lock periods and modification options vary—read the lock disclosure.
Can I include a lot purchase or land I already own?
Often yes: lot-plus-build packages or using owned land as equity. Seasoning, LTV, and documentation rules apply.
What if the build runs late?
Construction delays can require extensions, re-inspections, or contingency handling. Budget time and discuss contingency reserves with your builder and LO before you start.
Educational content only. Confirm with UMortgage+ powered by NEXA Lending, LLC.
Talk through your build and builder
a loan officer will check OTC channel fit (conventional/FHA/VA/USDA). Call (480) 233-7897.