A one-time close construction loan — construction-to-permanent — funds your build and permanent mortgage in a single closing. One set of closing costs, one rate lock for both phases when the program allows, and automatic conversion when your Certificate of Occupancy is issued.
With a one-time close loan, you close once before construction begins. That single closing establishes both the short-term construction phase and the long-term permanent mortgage. You do not return to the closing table when the house is finished — the loan converts in place.
During construction you make interest-only payments on drawn funds. When the builder completes the home and a Certificate of Occupancy is issued, the loan automatically rolls into a standard amortizing mortgage. Your payment structure changes from interest-only to principal and interest without a second round of closing costs.
Ryan and Steve help you weigh whether the convenience of one closing and a single rate lock outweighs the trade-off of less flexibility to shop permanent rates mid-build — because every builder timeline and market condition is different.
The streamlined structure works well for many custom builds — but it is not the right fit for every borrower or market cycle.
You pay closing costs once instead of twice. That can save thousands compared to a two-time close structure and removes the hassle of scheduling a second closing while you are moving into a new home.
When the program allows, your rate is locked at the initial closing for both construction and the permanent phase — subject to lender overlays. That protects you if rates rise during a long build.
You commit to your permanent rate before the home exists. If rates drop significantly during construction, you may not be able to shop a better permanent product without refinancing later.
Because the permanent loan is approved before the house is built, lenders underwrite more conservatively upfront — credit, income, plans, and builder credentials must all pass muster at the first closing.
Knowing the milestones helps you coordinate with your builder and set expectations for when full mortgage payments begin.
Step 1
Construction and permanent terms are set in a single closing before breaking ground.
Step 2
Funds release in phases as inspections confirm completed work on site.
Step 3
The home passes final inspection and the municipality issues a Certificate of Occupancy.
Step 4
The loan converts to a permanent mortgage — interest-only payments switch to full P&I.
Related guides to help you compare options and move toward pre-approval.
Separate construction and permanent closings — more flexibility to shop rates later.
Ground-up financing basics — draws, interest-only payments, and program overview.
Interest-only during the build vs full P&I after conversion or permanent closing.
Rate lock options for construction-to-permanent and two-time close files.
2MG Daily
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A one-time close construction loan — also called construction-to-permanent (C2P) — uses a single closing for both the construction phase and the permanent mortgage. You sign one set of loan documents, pay one round of closing costs, and the loan automatically converts to a standard mortgage when the home is complete.
Conversion typically happens when construction is finished, final inspections pass, and a Certificate of Occupancy is issued. At that point your interest-only construction payments switch to full principal-and-interest payments on the permanent loan — without a second closing.
Many one-time close programs allow you to lock a rate at the initial closing that carries through construction and into the permanent phase — subject to program rules and lender overlays. Rate lock terms vary; Ryan and Steve review options before you commit to a builder contract.
No. All loans are subject to credit, income, and property approval. Rates, fees, and program availability can change without notice and may not be available in all states. This page is educational — not a commitment to lend.
Find out whether construction-to-permanent fits your builder timeline and rate goals. Ryan & Steve walk you through one closing, one rate lock, and what happens at conversion — not a commitment to lend; subject to credit and property approval.