Land · construction · permanent mortgage · one closing
One loan covers your land, your construction, and your permanent mortgage, with one closing and one set of closing costs. Here's how it works, step by step.
20 minutes · no application required · no commitment
The basics
A one-time close construction loan, also called a construction-to-permanent loan, combines everything you need to build into a single loan: the land (if you're buying it), the money to build your home, and your permanent mortgage. You close once, before construction starts.
During the build, money is released to your builder in stages, called draws, as the work is completed. When your home is finished, the same loan becomes your regular mortgage. There's no second closing and no second set of closing costs.
There are two ways to finance a build. We offer both, and most of our clients choose one-time close. Here's how they compare.
One-time close
Two-time close
Two-time close still makes sense in some cases, like keeping your current home while you build. See when a two-time close makes sense.
Every NewBuild loan follows the same six steps, from your first call to Move-In Day. It starts with a free consultation, and no house plans are needed.
Before you close
A construction loan has more moving parts than buying an existing home. These pieces all have to line up before closing, and we help you work through each one.
The cost planner gives you an early estimate of your land, house, and site work together.
Paying for the build
During construction, you typically pay interest only on the money that has been drawn so far, not on the full loan amount. As more draws are released, that interest payment grows. Full principal and interest payments begin once the home is finished.
Some loans handle construction interest differently. For example, VA doesn't allow a veteran to pay construction interest, so it's typically built into the price. Your OTC Worksheet shows an estimate for both stages, during construction and after completion, so there are no surprises.
Your builder or dealer
Your builder or dealer is a big part of your loan. Early on, we review their licensing, insurance, and track record, so a paperwork issue doesn't stall your loan in the middle of the build.
Construction money is released in draws as work is completed, not paid all at once. Most experienced builders and dealers already work this way. If yours hasn't worked with construction draws before, we'll walk them through how it works before closing.
Builders and dealers can learn more on our builder and dealer partners page.
An honest answer
Sometimes the property, the builder, or your situation won't support a one-time close loan. When that's the case, we'll tell you directly and talk through your options, including a two-time close, waiting, choosing a different builder, or buying an existing home.
A good first call sometimes ends with "not yet." That's still a good outcome, because it saves you from paying for plans or committing to land before the loan can work.
Another option
Most clients choose one-time close, but a conventional two-time close is sometimes the better fit. We'll look at both with you.
If you'd rather not sell your home first and rent for a year while you build, a two-time close can let you stay put. Depending on your finances, you may plan to sell your current home before your permanent loan, or you may not need to.
A two-time close can work well for bigger builds. It requires at least 10% down, and a larger down payment can support a larger project.
Our two-time construction loan is designed for builds that finish within about 12 months, and it can be extended if needed.
The trade-off: when construction is finished, you'll qualify again for your permanent loan, sometimes called the takeout loan. It can be conventional, FHA, or VA. If your income, credit, or interest rates change during the build, that second approval isn't guaranteed, which is why most clients prefer one-time close. Some clients with strong finances simply pay off the construction loan in full when the home is finished.
When your build is finished, we can provide that permanent loan too. See refinancing after you build.
Choose your program
For eligible veterans and active duty. Often no down payment, no monthly PMI, and one closing.
Explore VA construction
When cash is tighter. A lower down payment and more flexible credit.
Explore FHA construction
For strong credit and a down payment. Often a fit for custom builds.
Explore conventional constructionBuilding something specific? Manufactured or modular On land you own Barndominium
FAQ
Usually, yes, but typically interest only on the money that has been drawn so far. Full payments begin once the home is finished. On VA loans, construction interest is typically built into the price, since VA doesn't allow the veteran to pay it. Your OTC Worksheet shows estimates for both stages.
Often, yes. A one-time close loan can include the land purchase along with construction and your mortgage. The land has to meet program requirements, so tell us about it on your first call.
Often, yes. If you already own your land, its equity can count toward your down payment. Several of our clients have built with little or no cash down this way. See building on land you own.
It depends on your land, your builder or dealer, the appraisal, and local permits. We'll give you a realistic estimate on your first call.
Construction loans release money in stages as the work is completed, not all at once. For manufactured and modular homes, a common schedule is 10% at closing, 80% on delivery, and 10% at completion. If your builder isn't comfortable with draws, we'll talk it through with them, or help you consider other builders.
Start with a free consultation instead. You don't need a builder to talk with us, and we can share builders and dealers we've worked with before. Once your program, land, and builder are lined up, you can start pre-approval.
We don't publish rates or APRs on this site, because your terms depend on your situation. All loans are subject to credit approval and underwriting. Equal Housing Opportunity. Tim Arrowood, NMLS #393468. American Pacific Mortgage Corporation, NMLS #1850. We offer NewBuild construction loans in Tennessee, Virginia, North Carolina, South Carolina, Georgia, and Kentucky.
A free consultation is 20 minutes. We cover your land, your eligibility, and the right loan structure. No application required.
Tennessee · Virginia · North Carolina · South Carolina · Georgia · Kentucky
20 minutes · no application · no commitment
NewBuild is led by the Arrowood Team at Preferred Rate. 260+ five-star Google reviews.
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