Question 1

What is a one-time close construction loan?

Accepted Answer

A one-time close (OTC) loan combines the construction loan and the permanent mortgage into a single closing. You lock your permanent rate up front and roll seamlessly from construction to a fully amortizing mortgage when the home is complete.

Question 2

What are the benefits over a two-time close?

Accepted Answer

One set of closing costs, one credit and income approval, and no re-qualification when construction finishes. This protects you from rate changes, credit changes, or job changes during the build.

Question 3

What down payment is required?

Accepted Answer

Down payment depends on the underlying program — as little as 0% down with a VA OTC, 3.5% with FHA OTC, 5% with Conventional OTC, and 0% down for USDA OTC in eligible rural areas.

Question 4

How are payments handled during construction?

Accepted Answer

Most OTC programs use interest-only payments during the construction period, calculated on the funds actually drawn. Payments convert to full principal and interest once the home is completed and the loan modifies to permanent.

One-Time Close Construction Loans

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