One closing, a locked permanent rate, and room for second homes.
A conventional one-time close loan finances the lot (if needed), the build, and a conventional fixed-rate mortgage with one closing, for a primary residence or second home. Ken Clark Jr. helps buyers and landowners in Sacramento, Northern California, New Jersey, and nationwide where licensing permits plan conventional construction through PRMG programs.
Short answer: it is a conventional (non-government) loan that combines construction financing and a fixed-rate permanent mortgage in one loan with one closing.
Because it is conventional, it can be used for second homes as well as primary residences, and mortgage insurance can be avoided at 20 percent equity or removed later. More on one-time close and conventional loans.
| Requirement | Generally |
|---|---|
| Credit | Stronger credit than government programs; minimums commonly start around 680 for 90% financing, higher for manufactured homes, depending on program guidelines |
| Financing | Commonly up to about 90% of value; higher in limited cases with substantial equity |
| Underwriting | Automated approval required |
| Occupancy | Primary residence or second home, one unit |
| Loan amount | Conforming and high-balance loan limits |
Short answer: if you already own the lot, the loan is generally measured against the as-completed value of the home and lot, and your land equity may cover the down payment and closing costs. If you are buying the lot, the loan is measured against the lower of total cost or as-completed value.
This mirrors Fannie Mae's single-closing rules. Any loan on the lot is paid off at closing. See using land equity.
Short answer: interest only on the money drawn so far, billed monthly. Payments start small and grow as the build progresses.
In some cases, an interest reserve may be funded from land equity so you are not paying interest out of pocket during the build, depending on program guidelines. You are typically responsible for property taxes during construction. Full principal and interest payments begin after the loan is modified to the permanent phase.
Short answer: the permanent rate is typically locked before closing and held through construction. If rates improve, a float-down may be available at completion, subject to program guidelines.
Ask how the lock, the construction term, and any extension interact, because running past the completion date can affect your terms.
Short answer: construction terms of 6, 9, or 12 months are common. Projects that run past 12 months may require updated credit and income documents.
Fannie Mae's single-closing guidelines limit any single construction period to 12 months and the total to 18 months. Plan a realistic builder schedule.
Short answer: the loan is modified to its permanent terms without a second closing. If you have less than 20 percent equity, mortgage insurance begins at that point. You may be able to pay down principal at modification.
A final inspection and completion report confirm the home was built as planned. The loan amount cannot increase after closing, so the budget and contingency need to be right up front.
| Home type | Generally |
|---|---|
| Site-built, panelized, modular | Eligible |
| Manufactured | May be eligible with added requirements |
| Barndominium | May be eligible with conditions (for example slab foundation, residential finishes, owner-occupied, supporting comparables) |
| Log, metal, container, post-frame | Commonly ineligible |
| Spec homes (no end buyer) | Not eligible on consumer programs; see builder construction loans |
| 2 to 4 units | Commonly ineligible on one-time close |
Rural properties commonly up to 10 acres. Pools, barns, and guest houses may be allowed when comparable sales support them.
Short answer: a licensed, full-time builder acting as the general contractor under a fixed-price, turnkey contract, who completes builder registration. Owner-builder and do-it-yourself projects are not eligible.
Details: builder registration. Permits are commonly required before the first draw.
Educational illustration only. Not an actual client, loan offer, or commitment to lend.
A couple owns a lake-area lot in El Dorado County worth $140,000, free and clear. Their builder's budget is $560,000, and the as-completed value is $760,000. On a conventional one-time close program measured against the as-completed value, a loan at 90 percent would be $684,000, and their land equity may cover the rest of the required investment and some closing costs. They pay interest only on drawn funds during the build, then the loan is modified to a fixed-rate mortgage at completion.
Answered by Ken Clark Jr., Certified Mortgage Advisor. Program availability and requirements vary and are subject to change.
A conventional loan that combines construction financing and a fixed-rate permanent mortgage in one loan with one closing, for a primary residence or second home.
Financing is commonly up to about 90 percent of value for qualified borrowers, so about 10 percent down or equivalent land equity, depending on credit and program guidelines.
Minimums commonly start around 680 for 90 percent financing, higher for manufactured homes, depending on program guidelines.
Yes, second homes are commonly eligible, unlike government programs.
Usually interest-only payments on funds drawn so far. An interest reserve funded from land equity may be possible in some cases.
The permanent rate is typically locked before closing. A float-down may be available at completion if rates improve, subject to program guidelines.
Commonly 6, 9, or 12 months. Longer projects may require updated documents.
Possibly, with conditions such as a slab foundation, residential finishes, owner occupancy, and supporting comparable sales.
No. A licensed builder acting as the general contractor under a fixed-price contract is required.
If you have less than 20 percent equity, mortgage insurance begins when the loan is modified to its permanent terms, and it can be removed later under federal rules.
The loan amount cannot increase after closing, so upgrades after closing are paid directly or covered by the contingency. Finalize selections before closing.
Guidelines change. Verify current program requirements with Ken Clark Jr. before relying on them for a transaction.
Disclaimer: This content is for educational purposes only and is not a commitment to lend, a guarantee of approval, or a rate quote. Loan programs, down payment requirements, terms, and eligibility depend on borrower, property, project, builder, and program qualifications, are subject to underwriting, and vary by state. Not all applicants or projects will qualify. Builder registration is a documentation review for program eligibility and is not an endorsement of any builder. Equal Housing Opportunity. Paramount Residential Mortgage Group, Inc. (PRMG), NMLS #75243. Ken Clark Jr., NMLS #225375. PRMG is licensed in 49 states, excluding New York.
Certified Mortgage Advisor and Branch Manager at PRMG Mortgage (NMLS #75243). 28 years in mortgage lending. Specializes in FHA, VA, conventional, DPA, jumbo, Non-QM, renovation, and construction financing for buyers and investors in Sacramento, New Jersey, and nationwide. PRMG is licensed in 49 states, excluding New York. Three-time Gold Award winner for Highly Reviewed Mortgage Team in Sacramento (2023, 2024, 2025). NMLS #225375.
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