Construction-to-Permanent Loans for Your New Home

Plan the financing before you break ground.

A construction loan pays for building a home. There are two kinds. Two-step: a short construction loan that turns into a permanent mortgage when the house is done. Single-close: one loan that covers the land, the build and the permanent mortgage. Single-close is the one I offer. Down payments can be as little as 10%, depending on loan size, subject to credit approval and program terms. The money goes out in draws as the build hits milestones, not in one lump sum.

Building a home means coordinating a lot, a builder, a budget, and a timeline. Your financing should account for how those pieces fit together.

Work with Sean Shallis, a U.S. Bank Mortgage Loan Originator, to explore whether construction-to-permanent financing fits your project, and understand the requirements before you move forward. Sean serves physicians in all 50 states.

Discuss Your Construction Project See How the Process Works Or ask Rosie a quick question first

Already have plans or a builder? Bring what you have. Still exploring? Start with a conversation about your goals.

Who is a construction loan right for?

Someone building a home to live in: on a lot you own, a lot you're buying, or with a builder you've picked. If you're building a rental or a spec home, that's a different loan.

This page is for people planning to build a home for their own use. Your starting point might be:

You're buying land and planning a new home

Discuss whether an available program can finance the lot purchase and construction together, and what you will need before applying.

You already own your lot

Review how the land, any existing debt, and the proposed construction budget affect the financing options available to you.

You have a builder and plans

Bring your plans, specifications, construction agreement, and estimated budget so we can discuss the financing review and next steps.

You're a physician planning a custom home

Ask whether an available construction program fits your professional situation, income documentation, and student-loan obligations.

Planning a substantial renovation instead? Explore renovation financing.

Building a rental property, speculative home, or development? That is a separate conversation. Do not assume the homeowner financing described here applies.

What is construction-to-permanent financing?

Construction-to-permanent financing is designed to address the construction phase and the mortgage that follows.

With an eligible single-close program, those phases are arranged through one loan closing rather than separate construction and permanent mortgage closings. The details, including payment structure, rate terms, completion requirements, and conversion conditions, depend on the program.

Before committing, understand:

What you will pay during construction.
How funds will be released.
What your builder must provide.
How the permanent mortgage rate is established.
What happens if the project is delayed or exceeds its budget.
What conditions must be met when construction is complete.

How much down payment does a construction loan require?

As little as 10%, depending on loan size. Subject to credit approval and program terms. The exact amount depends on the program and your file, so we confirm it before you sign with a builder.

Two-step vs single-close construction loans: which is better?

For most people building a home to live in, single-close. You qualify once, close once and pay one set of closing costs. Two-step can make sense if you want to shop the permanent loan later. Single-close is the one I offer.

Two-step vs single-close construction loans
	Two-step	Single-close
Closings	Two: one for the build, one for the permanent loan	One closing covers land, build and permanent loan
Rate lock	Permanent rate set at the second closing	Set up front at the one closing
Interest during build	Paid on funds drawn	Paid on funds drawn
Qualification	You qualify twice	You qualify once

Subject to credit approval and program terms.

How the process works

1.
Review your goals and financing options
We start with your estimated project cost, available funds, income, existing obligations, and intended timeline. The goal is to identify a potential financing path and the information needed to evaluate it, not to promise approval before the review is complete.
2.
Review the property, builder, and project
Construction financing involves more than the borrower's qualifications. The proposed home, builder, plans, budget, and construction agreement also need to meet applicable requirements. You will receive guidance on the documentation required.
3.
Understand the terms before closing
Review the proposed loan structure, required funds, construction-period payments, fees, draw process, and completion conditions. This is also the time to ask how changes, delays, and cost overruns would be handled.
4.
Build and complete the required milestones
Construction funds are disbursed according to the loan's draw procedures. Applicable inspections, approvals, and documentation requirements will be explained before construction begins.
5.
Complete the transition to permanent financing
The transition follows the conditions in your loan documents. Confirm the required completion documentation, payment changes, and any remaining conditions before the construction phase ends.

What to prepare for your first conversation

You do not need a finished application to ask questions. Bring whatever is available:

Property address or information about the lot.
Whether you own the land and whether it has an existing loan.
Estimated construction budget.
Builder's name and contact information.
Plans, specifications, and construction agreement, if available.
Target start and completion dates.
General information about your income, debts, and available funds.

We can then identify what is missing and what to do next.

Questions to ask before choosing a construction loan

Can the loan include the land purchase?

Ask whether the available program can include land acquisition and how the transaction would be structured.

How much money will I need upfront?

Your required contribution depends on the program, your qualifications, the property, and the project. Ask how existing lot equity would be evaluated and whether reserves or contingency funds are required.

How are payments calculated during construction?

Ask whether the proposed program uses interest-only construction payments, what balance those payments are based on, and when payments begin.

When is the permanent mortgage rate established?

Review the rate-lock options, their duration and cost, and what happens if construction extends beyond the expected completion date.

What happens if the project runs over budget or takes longer?

Understand who is responsible for additional costs, how change orders are handled, and whether extensions are available under the proposed loan terms.

Does my builder need approval?

Ask about builder eligibility, required documentation, insurance, and the project-review process.

Can I use this financing for a major renovation?

Renovation projects may require a different financing approach. Review the renovation loan page or discuss the project directly with Sean. Renovation loans

Talk through your project before you commit

Whether you are evaluating a lot, comparing builders, or reviewing a construction budget, start by understanding how the financing could work.

Discuss your project with Sean and leave with a clearer picture of the information needed and the next steps.

Discuss Your Construction Project

Sean Shallis

Mortgage Loan Originator, U.S. Bank National Association

NMLS #2362814

Loan approval is subject to credit approval and program guidelines. Program availability, terms, and property eligibility vary.

Construction Loans by State

Sean serves physicians in all 50 states. Program availability varies by state and property. Select your state for local details.

Go deeper

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