Construction loans
One close, a planned draw process, and a lender with more than two decades of job-site lending experience.
Short answer
A construction loan funds your home build in stages called draws, then becomes your permanent mortgage. With a one-time close you sign a single set of documents before ground breaks. I have financed builds for more than two decades, so I know where draw plans and builder documentation can go wrong.
Who this is for
- Families building a custom home on land they own or are buying
- Buyers replacing or substantially rebuilding an existing home
- Landowners ready to turn a lot into a primary residence or second home
- Anyone whose builder has been burned by lenders that fund draws late
What it takes to qualify
- Land you already own, or a lot purchase rolled into the loan. Equity in land you have held often counts toward the project.
- A licensed builder who passes lender review. Owner-builder programs exist but are rare and restrictive.
- Complete plans, specifications, and a line-item budget. The appraisal is based on these, valuing the finished home.
- Credit, income, and reserves like a standard mortgage, plus a contingency cushion for overruns.
How it works with me
A process you can see the whole way through
Project review first
Before any application, we review your land, plans, budget, and builder. I flag the gaps that would stall underwriting while they are still cheap to fix.
Builder approval
My team collects the builder's licensing, insurance, and references early so missing paperwork is identified before it stalls the file.
One close, locked
We structure the one-time close, or the two-time close if it genuinely fits better, and you sign before ground breaks.
A managed draw process
I help coordinate the inspection and draw calendar through the build, with clear milestones and updates for you and your builder.
What to know before you decide
One close or two
A one-time close wraps construction financing and your permanent mortgage into a single approval and a single closing. You qualify once, sign once, and the loan converts when the home is finished. A two-time close uses a separate construction loan, then refinances into permanent financing at completion, which means qualifying again and paying a second set of closing costs, but can allow restructuring at the end if your situation changed.
For most families the one-time close wins on certainty. You are not betting on your job, your credit, and the market all holding still for a year. I will show you both structures with real tradeoffs, not a default answer.
How draws actually work
The budget is split into stages, foundation through finish. As each stage completes, an inspector verifies the work and the lender releases that draw to the builder. During construction you typically pay interest only on what has been drawn so far, so payments start small and grow with the build. When the home is done, the loan converts and normal payments begin.
Late draws are how builds stall and how builder relationships sour. My job is managing that pipeline, keeping inspections scheduled, paperwork complete, and draw requests moving so avoidable financing delays are less likely to disrupt the build.
What kills construction deals
Three things: budget gaps, builder paperwork, and change orders. Budgets missing site work, utilities, or finish allowances blow up mid-build. Builders who cannot produce insurance, licensing, and references stall approval. And mid-project upgrades usually get paid in cash, because the loan was sized to the original plans. I pressure-test all three before we submit anything, which is why my construction files are prepared before the expensive work begins.
One-time close vs two-time close
| One-time close | Two-time close | |
|---|---|---|
| Approvals | Qualify once | Qualify twice, before and after the build |
| Closings and closing costs | One | Two |
| Financing certainty | Permanent terms set before construction starts | Permanent loan depends on your finances and the market at completion |
| Flexibility at completion | Conversion is defined up front | Can restructure the permanent loan at the end |
| Best for | Most families building a home to live in | Borrowers expecting a major financial change during the build |
Qualitative comparison. Structures vary by program.
Rates and terms subject to change without notice. Not a commitment to lend. Not available in all states. This is not tax, legal, or financial advice. Consult a qualified professional for your specific situation.
Run your own numbers first
Sizing a build budget against your income? The affordability calculator gives you a working range before you sit down with plans and a builder.
Open the calculatorsRelated programs
Construction loans: common questions
Do I need to own the land before applying for a construction loan?
No. The loan can purchase the lot and fund the build in one transaction, or pay off an existing land loan. If you have owned the lot for a while, its current value, not just what you paid, often counts toward your equity in the project.
Do I make payments while the home is being built?
Typically you pay interest only on the amount drawn so far, not the full loan amount. Payments start small at foundation and grow as stages complete. Once the home is finished and the loan converts, regular principal and interest payments begin. I map the payment curve for you before you commit.
Can I be my own general contractor?
Usually not. Most programs require a licensed, lender-approved builder because draw funding depends on verified professional work. True owner-builder programs exist but are rare, restrictive, and generally reserved for licensed professionals building their own home. If that is you, we can talk about it honestly.
How does the appraisal work on a home that does not exist yet?
The appraiser values the finished home using your plans, specifications, and budget, plus comparable sales. That future value is what the loan is built on. It is also why complete, realistic plans matter so much. A vague budget produces a weak appraisal, and a weak appraisal shrinks your loan.
What happens if construction goes over budget?
The loan is sized to the original budget, so overruns are usually paid in cash. Good files build in a contingency reserve up front, and I push for one on every project. Mid-build upgrades and change orders are the most common cause of overruns, so decide your finishes before you break ground.
How long do I have to finish the build?
Programs set a defined construction period, commonly around a year, with extensions possible when they are requested early and documented. Weather, permits, and material delays happen. The builds that get in trouble are the ones where nobody tells the lender until the deadline has passed. I stay ahead of that for you.
Fine-tune your Construction loans plan
Send the property, purpose, timing, and numbers you already know. The email opens prefilled for this Construction loans page so the review starts in the right lane.
MortgageOne Inc. is licensed for consumer mortgage lending in 41 states and Washington, DC. Chris Lamm is individually licensed in 19 states.