Couple smiling on their future home foundation in Nevada.

One-Time Close Construction Loans in Nevada Explained

Q: What is a one-time close construction loan?

A lender's seasoning period is a mandatory waiting time after you purchase or refinance a property before you can access the full after-repair value (ARV) for a cash-out refinance. Most DSCR lenders require a seasoning period of 6 to 12 months. Refinancing before the seasoning period concludes typically means the lender will base the loan amount on your original purchase price plus rehab costs, which severely limits the amount of equity you can cash out. Waiting until after the period allows you to borrow against the full market value you created through your renovations.

Q: How does a one-time close loan differ from a traditional two-time close process?

To justify a higher appraised value, you should provide the appraiser with a detailed and organized renovation packet. This packet removes guesswork and provides concrete evidence of the work performed. It should include: a cover letter summarizing the major upgrades, a detailed scope of work document itemizing all improvements, compelling before-and-after photos showing the property's transformation, copies of paid invoices and receipts for materials and labor, and copies of any official building permits that were issued for the work.

Q: What are the primary advantages of choosing a one-time close loan?

No, LTV limits for cash-out refinances vary significantly among different DSCR lenders, as each has its own guidelines and risk tolerance. While purchase loans may reach 80% LTV, cash-out refinances are often capped at 70% or 75% LTV. The specific LTV offered to an investor is influenced by several factors, including: Credit Score (higher scores typically qualify for higher LTVs), DSCR Ratio (a stronger income-to-debt ratio may result in a better LTV offer), Property Type (a single-family home might receive a higher LTV than a multi-unit property), and Loan Amount (some lenders may offer different terms based on the size of the loan).

Q: Can you lock in a mortgage rate before construction begins?

Your property's monthly rental income is the foundation of a DSCR loan approval. The formula is: DSCR = Gross Rental Income / Total Monthly Housing Payment. A higher rent results in a higher DSCR. This proves to the lender that the property can comfortably support a larger loan payment, which in turn allows you to qualify for a larger loan amount and maximize your cash-out.

Q: What are the typical down payment requirements for a construction-to-permanent loan?

Yes, it is often possible to pay for closing costs with the proceeds from your new loan, meaning you don't need to bring cash to closing. However, these costs are not added on top of your loan limit. Instead, the closing costs are subtracted from the total cash-out funds available to you after your existing mortgage is paid off. The total loan amount, including these costs, cannot exceed the lender's maximum LTV limit based on the property's appraised value.

Q: How does the builder receive funds during the construction project?

Investors can make several avoidable errors that reduce their available cash-out funds. The most common mistakes include: Poor Documentation (failing to provide an appraiser with a thorough renovation packet can lead to a conservative and lower valuation), Refinancing Too Soon (not waiting for the lender's seasoning period to expire is a costly mistake that forces the loan to be based on cost rather than value), Lacking a Tenant (attempting to refinance a vacant property is less favorable, as lenders prefer the security of a signed lease over estimated market rents), and Ignoring Lender Differences (accepting the first loan offer without comparing options can mean missing out on better LTV limits or shorter seasoning requirements from other lenders).

Q: What does the qualification process for a one-time close loan involve?

The ideal time to begin the refinance process is 30 to 45 days before your lender's seasoning period expires. This allows you to gather all necessary documentation, secure an appraisal, and complete underwriting so that you can close immediately once the seasoning requirement is met. Crucially, by this time, the property should also be 'stabilized,' which means you have a qualified tenant in place with a signed lease and have collected at least the first month's rent.

June 30, 2026

Specialized In Jumbo Loans, Investor Loans, DSCR Loans, Non-QM Financing, Commercial Mortgages, and Tax-Informed Lending Strategies

Published By

David Ghazaryan

Owner / Broker / Banker

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TL;DR

A one-time close construction loan offers a streamlined approach to financing a new home build. Here is a brief overview:

Single Transaction: It combines the construction financing and the final permanent mortgage into one loan with a single application and closing process, which can save you significant time and money on fees.
Rate Protection: This loan structure allows you to lock in your long-term, permanent interest rate before construction starts, protecting you from potential rate hikes while your home is being built.
Simplified Qualification: You only need to go through the underwriting and qualification process once, eliminating the risk and uncertainty of having to re-qualify for a separate mortgage after the home is completed.

What Is a One-Time Close Construction-to-Permanent Loan?

A one-time close construction loan, also known as a single-close or construction-to-permanent loan, is a specialized mortgage product that finances the building of a new home and the permanent mortgage in one single transaction. Instead of securing a short-term loan to cover construction costs and then refinancing into a traditional mortgage upon completion, this loan bundles them together from the start.

With a single application, underwriting process, and closing, you save significantly on fees and paperwork. Once construction is finished, the loan automatically converts into a standard permanent mortgage, typically a 15-year or 30-year fixed-rate loan. You simply start making principal and interest payments just as you would with any other home loan. This streamlined approach offers predictability and peace of mind, which is invaluable when navigating the complexities of building a new home in dynamic markets like Reno.

The All-In-One Advantage

The primary appeal is its simplicity. You qualify once, lock in your interest rate for the life of the loan upfront, and pay one set of closing costs. During the construction phase, you typically make interest-only payments on the funds that have been drawn by your builder. This keeps your monthly obligations lower while your home is being built.

One-Time Close vs. Two-Time Close: Key Differences

Understanding the distinction between a one-time and a two-time close is crucial for anyone planning to build a home. The path you choose has major implications for your budget, timeline, and overall stress level.

The Two-Time Close Process

Traditionally, building a home required two separate loans and two closings:

The Construction Loan: This is a short-term, higher-interest loan used to pay the builder. The lender disburses funds in stages as work progresses. To get this loan, you must submit your builder's credentials, plans, and budget for approval.
The Permanent Mortgage: Once the home is built and a Certificate of Occupancy is issued, you must apply for a brand new loan to pay off the construction loan. This means undergoing a second underwriting process, a second appraisal, and paying a second set of closing costs.

A new home under construction with wooden framing.

The biggest risk with a two-time close is uncertainty. If your financial situation changes (e.g., a job change) or if interest rates rise significantly during the build, you might not qualify for the permanent mortgage, or it could be far more expensive than you anticipated.

The One-Time Close Advantage

A one-time close loan eliminates these risks and inefficiencies. The comparison is straightforward:

One Closing, Not Two: You attend a single closing before construction begins. This saves you thousands of dollars in duplicate lender fees, title charges, and appraisal costs.
One Qualification Process: Your credit, income, and assets are fully underwritten once. You don't have to worry about re-qualifying after the home is built.
Locked-In Interest Rate: Your permanent mortgage rate is secured before the first foundation is poured. In a rising-rate environment, this feature alone can save you tens of thousands of dollars over the life of your loan. This provides immense security for projects in high-growth areas like Henderson.

Can You Lock a Mortgage Rate Before Construction?

Yes, absolutely. This is one of the most powerful benefits of a one-time close construction loan. You secure your long-term, permanent interest rate before construction starts.

Here’s a practical example. Imagine you are approved to build a home in Henderson with a total project cost of $700,000. Your lender offers you a 30-year fixed rate of 6.75% on a one-time close loan. You lock it in. Over the next 12 months while your home is being built, market rates climb to 7.5%. With a two-time close loan, you would be forced to accept the higher 7.5% rate for your permanent mortgage. But with your one-time close loan, your rate remains fixed at 6.75%, unaffected by the market surge. This rate protection gives you a predictable monthly payment and long-term financial stability.

During the construction phase, the loan functions as a line of credit. You only pay interest on the money that has been paid out to the builder, keeping your payments manageable until you can move in.

Down Payment for Building a Home in Reno

Down payment requirements for a one-time close loan vary based on the loan program and the total cost of the project (which includes the land purchase, if applicable, and all construction costs).

Here’s a breakdown of common options available to future homeowners in Reno and across Nevada:

Conventional Loans: These typically require the largest down payment, often ranging from 10% to 20% of the total project cost. However, if you already own the land, you can often use your equity in the lot toward the down payment requirement. (The data, information, or policy mentioned here may vary over time.)
FHA Loans: An FHA one-time close loan is an excellent option for borrowers with less cash on hand. The minimum down payment is just 3.5%. For a $550,000 home project, that’s a down payment of only $19,250. (The data, information, or policy mentioned here may vary over time.)
VA Loans: For eligible veterans, service members, and surviving spouses, a VA one-time close loan is unbeatable. It requires 0% down. The veteran can finance the entire cost of the project, from land acquisition to the final build, with no down payment. (The data, information, or policy mentioned here may vary over time.)
USDA Loans: Available in eligible rural areas, USDA construction loans also offer a 0% down payment option. While much of Reno and Henderson are not eligible, many surrounding communities are. (The data, information, or policy mentioned here may vary over time.)

How Funds Are Disbursed to Your Builder

Lenders don't simply hand over a lump sum check to your builder. To protect everyone involved, funds are distributed through a managed process called a draw schedule. This schedule is agreed upon by you, the builder, and the lender before closing.

Builder and homeowner reviewing construction blueprints on site.

The process works in stages:

Initial Draw: The first draw is typically released at closing to cover initial costs like permits, foundation work, and purchasing materials.
Milestone-Based Draws: As the builder completes specific phases of construction (e.g., framing, roofing, drywall), they request a 'draw' for that completed work.
Inspection and Approval: Before the lender releases the funds for a draw, they will send a third-party inspector to the site. The inspector verifies that the work for that phase has been completed according to the plans and to code.
Funds Released: Once the inspection is approved, the lender releases the funds directly to the builder or through a title company.

This system of checks and balances ensures the project stays on track and on budget, as the builder is only paid for work that is properly completed.

VA and FHA Construction Loans in Henderson

Government-backed loans are fully available for one-time close construction financing, providing incredible opportunities for buyers in communities like Henderson.

FHA One-Time Close Details

The FHA construction loan is a popular choice for first-time homebuyers and those with moderate incomes. Its key features include:

Low Down Payment: Requires only 3.5% down.
Flexible Credit Guidelines: FHA guidelines are often more lenient on credit scores compared to conventional loans. (The data, information, or policy mentioned here may vary over time.)
Mortgage Insurance Premium (MIP): FHA loans require both an upfront and an annual MIP. This is a cost to consider, but it's what enables the low down payment feature.

VA One-Time Close for Veterans

The VA construction loan is arguably the best home financing product on the market. For veterans looking to build, it offers unparalleled benefits:

No Down Payment: Eligible veterans can finance 100% of the project cost.
No Monthly Mortgage Insurance: Unlike FHA and conventional loans with less than 20% down, VA loans do not have a monthly mortgage insurance payment, which significantly lowers the monthly cost.
VA Funding Fee: Most borrowers will pay a one-time VA funding fee. This fee can be rolled into the total loan amount to avoid out-of-pocket costs. (The data, information, or policy mentioned here may vary over time.)

The Qualification and Approval Process

Qualifying for a one-time close loan is more detailed than for a standard mortgage because the lender is evaluating three things: you (the borrower), the property (the future home), and the builder.

Here are the typical steps:

Borrower Prequalification: First, you’ll get prequalified with a lender to determine your budget based on your credit, income, debt-to-income ratio, and assets.
Builder and Project Submission: You must select a licensed and reputable builder. The lender will need to vet the builder's credentials, insurance, and experience. You'll also submit the signed construction contract, budget, plans, and specifications for the home.
Appraisal: The lender will order an appraisal based on the plans and specs. The appraiser provides an 'as-completed' value, which is their expert opinion of what the home will be worth once it's finished.
Underwriting and Final Approval: An underwriter reviews your entire file—your financials, the builder's information, the contract, and the appraisal. If everything meets the lender’s guidelines, you will receive final loan approval.
Closing: You'll sign all the final loan documents at the title company. At this point, your loan is officially closed, your rate is locked, and funds are placed in an escrow account, ready for the builder to begin construction with the first draw. Building a custom home is an exciting journey, and securing the right financing is the foundation of your project. If you're exploring a one-time close construction loan in Nevada, consulting with a mortgage expert can help you understand your options, budget accurately, and navigate the process with confidence.

Building your dream home starts with the right financial foundation. If you're ready to explore a streamlined one-time close loan, we can help you understand your options and begin the journey. Apply for a Mortgage today.

Author Bio

David Ghazaryan is the expert mortgage strategist and founder behind iQRATE Mortgages. With a mission to fund home loans that traditional banks won't touch, David specializes in helping clients with unique financial situations, including those recovering from foreclosure or bankruptcy. He expertly crafts smart, strategic, and stress-free mortgages by leveraging a vast network of over 100 lenders to secure competitive rates for investors and homebuyers alike. Praised for exceptional customer service, David has helped hundreds of families with a 97% satisfaction rate, guiding them to the mortgage they deserve.