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What are the benefits a Construction Loan?
In today’s rising interest market, you will be able to:
- Get a 90% LTV conforming loan amount of up to $726,200 or a JUMBO Construction loan of up to 2 million at 90% LTV.
- Qualify only once! With only one Appraisal!
- Interest Only Payments during the Construction phase.
- Take up to 12 months to build.
Pay Closing costs only once! Saving thousands in upfront expenses. LOCK IN YOUR INTEREST RATE TODAY!
The loan is serviced right here in Oklahoma.
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What Property Types Qualify for Building in Oklahoma?
Our One-Time Close Construction Home Financing program supports a wide variety of custom homes, including:
- Single-family site-built homes
- Modular homes
- Manufactured homes (double-wide or larger) on a permanent foundation
- Barndominiums, subject to an acceptable appraisal
Key Requirements for a Construction Loan
- Credit Score: Typically requires a score between 620 and 850.
- Appraisals: Since the house isn't built yet, we order a "subject to completion" appraisal based on architectural plans, building specifications, and comparable homes in the area.
- Hire a general contractor for modular or manufactured homes.
- Must have an experienced builder or general contractor for single-family site-built homes.
- Pools and outbuildings are acceptable when managed by the contractor.
What is the Down Payment Requirement for a Construction Loan in Oklahoma?
- Land purchase and construction can be funded together at closing.
- If you already own the land, the new construction loan can pay off any existing land loan. As a benefit, the loan will be considered a refinance if you owned the property before applying — so the loan-to-value ratio is calculated as the requested loan amount as a percentage of the land's total appraised value plus improvements.
- If you own the land free and clear, you can use the equity toward the 5% down payment. In many cases, land equity will reduce or eliminate the required down payment.
- Not ready to build yet? Spurr Mortgage can finance a 15-year, no-down-payment land loan so you can buy the land now and build later.
- A one-time close construction loan covers the total project cost (land and construction), available through Conventional, Fannie Mae, USDA, and FHA financing.
- Minimum 5% down payment required on the total purchase price if you don't already own the lot or rural land.
- Conventional Fannie Mae: 95% LTV, one-time close construction loan up to $832,750.
- FHA Construction-to-Permanent: As low as 3.5% down (up to 97.50% LTV). Loan amounts up to $541,287 — ideal for first-time homebuyers who want to preserve cash for upgrades, furniture, and landscaping.
- VA One-Time Close: Can finance 100% of construction costs and land value for eligible veterans, active-duty service members, and certain surviving spouses with full VA entitlement.
- USDA: 100% financing for properties in rural areas, capped by county median household income.
How Does a One-Time Close Home Construction Loan Work?
A One-Time Close Home Construction Loan combines short-term construction financing with long-term permanent mortgage financing from day one:
- Rate Protection with Float-Down Option: Lock your rate upfront, and take advantage of lower rates if the market drops before your home is finished — at no extra cost.
- Simultaneous Approval: Lock in both your construction loan and your 15- or 30-year permanent mortgage at the same time.
- One-Time Close: Pay closing costs only once, saving you thousands compared to two separate closings.
- Automatic Conversion: When construction is complete (typically 6–12 months), your loan seamlessly converts to a traditional mortgage — no re-application, no re-qualification, no second closing.
- One Appraisal: A single appraisal protects you from unexpected market changes until final closing.
What are the Key Benefits During the Construction Period?
- Interest-only payments during construction — you only pay interest on funds as they're drawn.
- Milestone draws release funds in stages as your builder reaches construction milestones.
- Lower overall costs — save on closing costs, appraisals, and fees with a single closing.
- Streamlined process — qualify once and enjoy peace of mind from groundbreaking to move-in day.
- No surprises — a fixed timeline and automatic conversion remove uncertainty.
- With just one application, one credit check, one appraisal, and one set of closing costs, you avoid the stress and expense of a traditional two-step process.
What Happens if Construction Costs Exceed Estimates?
You're responsible for cost overruns — the lender only provides the approved loan amount. Budget at least a 5% contingency for unexpected costs; this reserve covers things like material price changes, site issues, and design changes. It's generally recommended on all contracts to cover overages, so be sure to discuss contingency planning with your builder and loan officer.
Can I Act as My Own General Contractor?
Most construction lenders require a licensed, insured builder. Owner-builder programs do exist, but they're harder to qualify for — you'll typically need construction experience, detailed plans, and often a larger down payment. Ask us about owner-builder qualifications.
What Qualifications Must a Builder Meet to Obtain Approval?
Experience and Track Record
- Three years of active custom home-building experience, including five new builds from the ground up.
- Project history: Three previous clients where residential construction was completed from the ground up, finished more than six months ago.
- General liability insurance: Minimum coverage of $1,000,000 per occurrence.
- Workers' compensation: An active policy for all direct employees is required.
- Workers' compensation exemption form if using 100% independent contract labor.
- A valid driver's license for identification.
Credit and Financial Verification
- Personal credit report used if no business credit profile exists.
- Minimum credit score of 620 required for principal owners.
- Clean payment history with zero 60- or 90-day delinquencies.
- 30-day late payments reviewed case-by-case with a letter of explanation.
Professional References
- Minimum of 3 homeowner references from past clients with projects completed over 6 months ago.
- Minimum of 3 trade references from current subcontractors or material suppliers.
What are the Pros and Cons of Rural Land Appraisals in Oklahoma?
A construction appraisal is essential — it helps determine the home's future value and the amount a lender can finance. While it adds cost and can sometimes limit borrowing power, it protects both borrower and lender by ensuring the completed home is supported by the local market. For rural land projects, proper planning, realistic construction budgets, and a home design that fits the local market all help achieve a stronger appraisal outcome.
Benefits of an Appraisal on Rural Property
1. Protects the Borrower
- Helps ensure you are not overpaying for the land or construction costs.
- Provides an independent opinion of value.
2. Protects the Lender
- Confirms the property will be worth enough to secure the loan.
- Reduces lending risk.
3. Identifies Marketability Issues
- If the completed value exceeds total project costs, borrowers may gain instant equity.
- Existing land ownership can often be used toward down payment requirements.
Disadvantages of an Appraisal on Rural Property
1. Limited Comparable Sales
- Rural areas may have few recent sales of similar homes.
- This can make value estimates more challenging and sometimes result in values lower than expected.
2. Can Reduce Loan Amount
If the appraised value comes in below construction costs, the borrower may need a larger down payment, design changes, cost reductions, or additional equity from owned land.
3. Potential Delays
Scheduling and completing the appraisal can slow loan approval, and delays are more common in remote areas with fewer qualified appraisers.
4. Subject to Market Conditions
Falling property values or weak local demand can affect the final appraised value, and rapidly increasing construction costs may exceed local market support.
What are the Key Considerations in Rural Construction Appraisals?
- Road access and easements
- Water source (rural water or well)
- Septic systems
- Utility availability
- Acreage size
- Land usability
- Local market demand
- Distance from employment centers and amenities
The more similar rural home sales available in the area, the more reliable the appraisal tends to be.
People Also Ask
What is a One-Time close construction loan?
You need only qualify once and pay a single set of closing costs.
With this loan, you receive both an interim construction loan and a 15 or 30-year permanent loan simultaneously. When the house is finished, the loan automatically switches to permanent financing with a free flow down interest rate option. In addition, the program offers 90% LTV up to $726,000.
YOU ONLY NEED TO QUALIFY ONCE- REDUCED CLOSING COSTS
A One-time close construction to perm loan only requires you to go through this process once! That means you can move through the building steps with peace of mind, knowing your permanent financing needs are already in place and will automatically convert to a permanent loan at the end of construction and you can get the best construction equipment for these projects at sites like https://www.verdex.com.au/. In addition, a one-time construction loan eliminates the redundancy of a two-time close by having a single closing and a single set of closing costs. Subsequently, you only have to pay the closing costs once and save thousands of dollars!
A one-time close construction loan requires one appraisal before closing the loan. That means no surprises with two home appraisals when the house is completed and only one appraisal fee! This approach is similar to equipment leasing for businesses, which helps simplify financing while keeping costs predictable and manageable.
In today’s rising interest rates, you will be able to:
Lock your long-term 15 or 30 years interest rate at closing that will not change, regardless of the market conditions. Knowing that the rate will not increase during construction gives you greater security that your payment won’t be subject to change.
No Money Down with Land Equity
If you own your land outright, you can put the equity towards the down payment requirement of 10%. Or pay off the balance of the land loan with the One-Time Close loan proceeds. As a benefit, the loan will be considered a refinance if you own the property before the application. Therefore, the Loan-to-Value will be calculated from the requested loan as a percentage of the land’s total appraised value plus improvements.
In many cases, the Land Equity will reduce or eliminate the required down payment.
How can a One-Time Close Construction Loan Benefit You?
Most construction loans require two separate closings. But the One-Time Close combines them all, saving you time and money. In addition, you are protected from rising interest rates during the construction phase. As an added benefit, you will not have to re-qualify for the permanent mortgage, which can make many borrowers anxious about their credit scores or income levels changing when the construction ends.
What is the construction term for a one-time construction loan?
The construction portion of the loan can run anywhere from 6 months to 12 months, giving the builder plenty of time to complete the house and sell your existing home.
During that period, you pay monthly interest only – on the amount that the lender has disbursed and based on the stage of construction.
What makes up the Construction Loan Cost?
- Land Value may be purchased at closing with proceeds from the construction loan. However, you may already own the land; in that case, the new loan will pay off your existing construction loan. Or you may own the land free and clear.
- Hard Costs are tangible costs associated with the home’s construction, including materials and labor costs.
- Contingency Reserve covers unforeseen costs or upgrades in the home construction that usually consists of an additional 10% of the construction costs. This is generally recommended on all contracts to cover change orders or upgrades.
How are draws disbursed from my construction loan?
Jennifer Buffington – Sr. Loan Officer
Construction Loan Specialist
405-348-9919 or 405-659-7990
233 E. 10th Street Plz, Edmond, OK.73034
If you want to learn more about a One-time close construction loan, call Jennifer Buffington 405-348-9919 or my cell at 405-201-4829.
Whether you prefer to talk in person, on the phone, or simply complete an application online.
– “I’m laser-focused on making your construction loan experience easy, seamless, and pain-free.”
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