A one-time construction to perm is one loan, which you close one time. New construction often requires two loans. There are “draws” to your builder upon completion of certain phases of the construction process. Once your home is complete, all accumulated “draws” to your builder become your permanent mortgage. Usually, the interest rate is locked in up to 60 days before the construction loan closes. The rate is often the same for the interest-only construction period as for your end permanent mortgage.

A two-time close is a loan in which you close the construction loan, which is interim financing for the “draws” to your builder, followed by the need for a second closing for permanent financing. They call it a two-time close because you are closing twice. Interim construction financing is typically up to 24 months in length, depending on the project’s scope. The main drawback of a two-time close is added costs and requalifying permanent financing. Additionally, you may be at risk of closing at a much higher rate once your home is complete.