Construction to Permanent  ·  Licensed in NJ · CT · FL  ·  NMLS #1630225

Construction to Permanent Loans — One Loan, One Closing

A construction to permanent loan covers the build and the mortgage that follows it, so you qualify once and pay one set of closing costs. While the house goes up you pay interest only on what has actually been drawn. When the certificate of occupancy is issued it converts to a 15- or 30-year fixed — no second application, no second appraisal. Conventional runs to 95% of value on a primary residence, VA to 100% for eligible veterans.

Last updated August 2026 · reviewed by a licensed mortgage broker

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★★★★★ 5.0 on GoogleNMLS #1630225 · verify on NMLS Consumer AccessLicensed in NJ · CT · FL (FL MLB 1987)Family owned since 2017 · Ridgefield, NJ
580Minimum
Credit Score
620Conventional
Minimum Score
5%Of Build Cost
Held as Contingency
$4MVA Jumbo
Maximum Base Loan


Your Answer Right Here

What Is a Construction to Permanent Loan?

A construction to permanent loan — also called a one-time close construction loan or C2P mortgage — finances the building of your home and converts automatically to a long-term mortgage at completion. You qualify once, close once, pay one set of closing costs. During construction, interest-only payments apply on the drawn balance. Once the certificate of occupancy is issued, the loan becomes a 15- or 30-year fixed mortgage with no second application. The CFPB notes construction loans require more documentation than standard mortgages — we manage the draw schedule and lender coordination so your build stays on track.


Program Snapshot

Conventional vs. VA — Side-by-Side Program Comparison

Both programs use a single closing with interest-only payments during construction. Key requirements at a glance:

Feature Conventional OTC VA OTC
Eligible Borrowers Any qualified borrower Veterans, active duty, surviving spouses
Max LTV (1 Unit Primary) 95% 100%
Min Credit Score (FICO/Vantage) 620 / 640 580 / 600
Construction Period Max 11 months Max 11 months
Term Options 15- or 30-Year Fixed 30-Year Fixed; Jumbo available
Down Payment Required 5% (1 unit primary) $0 (eligible veterans)
Investment Properties Allowed (lower LTV) Primary residence only
Temp Buydowns Not permitted Not permitted

Construction to Permanent Loans — One-Time Close ProcessPHASE 1Apply & ApproveOne applicationOne qualificationBuilder approvedby lender✓ Conv or VA eligible→PHASE 2Single ClosingOne set ofclosing costsRate lockedbefore ground breaks✓ No second closing→PHASE 3Construction PeriodInterest-only paymentson drawn balanceMax 11-monthbuild window✓ Draw schedule managed→PHASE 4 — PERMANENT MORTGAGEConverts automatically at CO issuance15- or 30-year fixed rate mortgageNo requalification requiredNo second appraisal needed✓ Conventional up to 95% LTV✓ VA up to 100% LTV — $0 downConstruction to Permanent Loans — Mortgage-World.com | NMLS #1630225 | Example for illustration only.
Construction to Permanent Loans — One-Time Close Process | Mortgage-World.com

Conventional Program

Conventional Program Parameters, LTV & MI Coverage

One-time close fixed — 15- and 30-year terms with interest-only payments during construction. Maximum construction period: 11 months.

Basic Product Parameters & Requirements
AUS & Builder Requirements
Project and builder must be lender-approved before closing. Escrow waiver required during construction. Temporary buydowns are not permitted.
Loan Amount & Contingency
Maximum loan amount based on the conforming limit for units and county. A 5% contingency fund is held from the construction cost. Principal reductions are not permitted during construction.
Document Freshness & Final Draw
Credit documents cannot exceed 12 months at modification — income may need refreshing before permanent conversion. The final draw is withheld until all construction processes are complete: final inspection, CO, and modification to permanent financing returned.
MI Coverage Summary — Conventional OTC
Loans above 80% LTV require private mortgage insurance. Coverage tiers: 90.01–95% LTV — 25% (15yr) / 30% (30yr). 85.01–90% LTV — 12% (15yr) / 25% (30yr). 80.01–85% LTV — 6% (15yr) / 12% (30yr). No MI required at or below 80% LTV.


VA Program

VA Construction Loan Eligibility, LTV & Key Requirements

The VA one-time close construction loan is available to eligible veterans, active-duty servicemembers, and surviving spouses — 100% financing on a primary residence with no down payment and no monthly mortgage insurance.

● Loan Terms & Eligibility
30-year fixed and 30-year jumbo fixed. Interest-only payments during the build, max 11 months. Refinances submitted as Cash Out per VA guidelines. Conventional product follows Fannie Mae guidelines. Primary residence only. Co-ops and attached condos not permitted.
● Max LTV & Loan Amounts
100% LTV on purchase for 1-4 unit primary residences. Max base loan at conforming loan limit; jumbo minimum is $1 over that limit, up to $4,000,000. Split entitlement is eligible for married veterans.
● Builder & Project Requirements
Project and builder must be pre-approved before closing. Manufactured properties permitted on non-jumbo, 1-unit only. A 5% contingency fund held from the build cost. Escrow waiver not permitted. AUS must be DU Approve/Eligible.
● Credit & Income Requirements
Minimum FICO/Vantage 580/600. All borrowers must have a qualifying score. Full income documentation required per VA guidelines. Principal reductions not permitted during construction. Final draw withheld until final inspection, CO, and modification to permanent financing are complete.

Eligible veteran or active-duty servicemember? The VA construction to permanent loan gives you 100% financing with no down payment. Learn more about VA loans at Mortgage-World.com or start your application today.


What Lenders Look At

Construction to Permanent Loan Requirements

Beyond standard purchase requirements, construction to permanent loans add builder approval, draw management, and document freshness checks. Here is what lenders evaluate.

● Builder Approval
The builder must be licensed, insured, and approved by the lender before closing. Lenders review the builder's track record, financial standing, and construction contract. Selecting a builder early and gathering documentation speeds approval. Self-build and owner-builder scenarios are generally not permitted under standard Conventional or VA one-time close programs.
● Credit Score
Conventional one-time close requires a minimum FICO/Vantage score of 620/640. VA requires 580/600. All borrowers must have a qualifying score. Credit monitoring during the build period is recommended, as construction to permanent loans span a longer window than standard purchases.
● Income Documentation
Full documentation is required — two years of W-2s, tax returns, 30 days of pay stubs, and bank statements. Income documents cannot be more than 12 months old at the time of the modification to permanent financing, so plan for a possible refresh if the build runs long. See the HUD homebuyer resource for general guidance.
● Reserves & Down Payment
Conventional borrowers need a minimum 5% down on a 1-unit primary. VA borrowers with full entitlement need no down payment. Lenders look for adequate reserves — typically 2 months of PITI. A 5% contingency fund is required from the construction cost and held in escrow.


Why It Matters Who You Work With

Why Use a Broker for Your Construction Loan

Construction to permanent loans are more complex than a standard purchase. The builder must be approved, the draw schedule managed, and the file kept current through an 11-month window. Most retail banks offer only their own rate. As a mortgage broker we shop multiple loan programs to find the strongest rate and most flexible guidelines for your build — whether you are a W-2 employee on conventional or an eligible veteran on the VA program. See our Conventional Loan page and VA Loan page.

Ready to build? Tell us your property location, build cost, credit score, and income type. We identify the right program and lender before you sign a construction contract. Start your free construction loan application.

Not sure whether the Conventional or the VA one-time close fits your build?
Find out which one you qualify for

Before You Start

What Happens After You Apply

  1. You send the application

    A few minutes online. No documents at this stage.

  2. A licensed loan officer calls you

    Someone on our team covering your state.

  3. We ask for documents and pull credit

    Only once you have decided to move forward.

  4. You get an approval to shop with

    Typically back within the hour.

What Clients Say

Real Reviews From Our Clients

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Common Questions Answered

Common Questions From Borrowers Building a New Home

What is a construction to permanent loan and how does it work?
A construction to permanent loan — also called a one-time close or C2P loan — combines your construction financing and your permanent mortgage into a single loan with one closing and one set of closing costs. You make interest-only payments during the build. When your certificate of occupancy is issued, the loan converts automatically to a 15- or 30-year fixed mortgage without a second application.
What is the maximum loan-to-value for a construction to permanent loan?
Conventional one-time close: 95% LTV on a 1-unit primary, 90% on a second home, 85% on a 1-unit investment property. VA construction to permanent: 100% LTV for eligible veterans on a primary residence — no down payment required. Conventional loans above 80% LTV require mortgage insurance.
How long can the construction period last on a one-time close loan?
Both programs allow a maximum 11-month construction period with interest-only payments on the drawn balance. The final draw to the builder is withheld until all construction processes are complete — final inspection, certificate of occupancy, and modification to permanent financing.
Does my builder need to be approved before I close on a construction to permanent loan?
Yes. Both programs require that the project and builder are approved by the lender before closing. The builder must be licensed, insured, and meet lender criteria. Self-build and owner-builder arrangements are not permitted under standard one-time close guidelines.
What is the minimum credit score for a construction to permanent loan?
Conventional one-time close requires a minimum FICO of 620 or Vantage of 640. The VA construction to permanent program requires a minimum FICO of 580 or Vantage of 600. All borrowers must meet the qualifying score. If your score is borderline, we can review your credit profile and outline steps to strengthen it before application.
Can a veteran use the VA one-time close construction loan with no down payment?
Yes. Eligible veterans, active-duty servicemembers, and surviving spouses can use the VA construction to permanent loan to build a primary residence with 100% financing — no down payment required, no monthly mortgage insurance. The program is available as a 30-year fixed and 30-year jumbo fixed with base loan amounts up to $4,000,000.
What do I actually pay each month while the house is being built?
Interest only, and only on the money that has actually been drawn — not on the whole loan amount. Draws are released against the builder’s schedule as work is completed, so the payment climbs through the build rather than starting at full size. That matters if you are paying rent or an existing mortgage at the same time, because the early months are the cheapest ones. When the certificate of occupancy is issued the loan converts and you start paying principal and interest on a 15- or 30-year fixed.
Is any of the construction budget held back?
Yes. Five percent of the construction cost is held as a contingency fund, which is there for the things nobody put in the contract — rock where there was supposed to be soil, a change the township insists on. Separately, the final draw to the builder is withheld until the end of the job: final inspection done, certificate of occupancy issued, and the modification to permanent financing returned. Builders know this and price for it, but it is worth understanding before you negotiate a payment schedule.
What happens if the build runs past eleven months?
Eleven months is the maximum construction period on both programs, and it is a hard edge rather than a target. It does not get extended because the winter was bad. That is the strongest argument for using a builder who has finished projects of your size recently, and for a contract with a real completion date written into it. If a delay is genuinely coming, tell us early — there are more options at month six than at month ten.
Can I act as my own builder, or use a relative who builds houses?
No. Self-build and owner-builder arrangements are not permitted under standard one-time close guidelines, and the project and the builder both have to be approved before you close — licensed, insured, and able to satisfy the lender’s criteria. A relative in the trade can build it only if their business qualifies as the approved builder in its own right. This surprises people who were counting on saving the general contractor’s margin, so it is worth settling before you buy the lot.

Related programs: Vacant Land Loans.

Related Resources

Comparing Your Options?

Construction to permanentOne loan for the build and the mortgage after itYou are hereConventional loansIf you are buying rather than buildingCompareJumboWhen the finished value clears the conforming limitCompareVacant landIf you do not own the lot yetCompare
Related Construction ProgramsConventional loansJumbo loansHigh balancePre-approvalVacant land loans
construction to permanent loan — Mortgage-World.com, NMLS #1630225Mortgage-World.com
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Licensed in
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Broker license
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MLB 1987
Family owned since
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Office
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See what your construction to permanent loan would look like

A licensed loan officer will look at your score, your VA entitlement if you have it, and the builder’s contract, then tell you which of the two programs fits and what the down payment looks like on your own numbers. Worth doing before you sign anything with a builder.

What You Need
✓580 with VA entitlement, 620 conventional
✓One closing, one set of closing costs
✓No hard credit pull to check
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construction to permanent loan guide by Chris Luis, Broker/Owner of Mortgage-World.com, NMLS #1630225

Written and reviewed by Chris Luis, Broker/Owner of Mortgage-World.com, NMLS #1630225. About the author

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