Building a home in Arizona is an exciting journey — especially when you have the right financing in place. One of the most popular loan options for new construction projects is the one-time close construction loan. Unlike traditional construction loans, this streamlined financing solution combines the construction loan and permanent mortgage into a single process, saving time, money, and hassle.
Whether you’re a first-time home builder or a seasoned homeowner ready to build your dream house in Phoenix, Tucson, or Flagstaff, understanding how one-time construction loans work in Arizona can help you make confident and informed decisions.
What Is a One-Time Close Construction Loan?
A one-time close construction loan (also known as a single-close or construction-to-permanent loan) is a financing option that covers both the cost of construction and the long-term mortgage under one approval, one closing, and one set of fees.
Key Features of One-Time Close Construction Loans:
- One application and closing process
- Fixed or adjustable mortgage rate options
- Interest-only payments during construction
- Converts automatically to a permanent mortgage
- Reduces closing costs and paperwork
Why Arizona Homeowners Prefer One-Time Close Construction Loans
With Arizona’s growing population and hot real estate markets in cities like Phoenix, Scottsdale, and Mesa, more families are choosing to build instead of buy. That’s why one-time close construction loans are gaining popularity — they simplify the complex process of financing a custom-built home.
Benefits of One-Time Close Loans in Arizona:
- Less risk of rising rates: Lock in a low mortgage rate before construction begins.
- Streamlined approval process: No need to requalify once the home is complete.
- Lower costs: Pay only one set of closing costs and lender fees.
- Custom home flexibility: Build on your own land or lot in rural or suburban areas.
How the One-Time Close Construction Loan Process Works
Understanding the timeline and steps involved in a one-time close construction loan can help you prepare effectively.
Step 1: Get Prequalified with an Arizona Mortgage Lender
Before choosing a builder, work with a licensed Arizona mortgage lender who offers one-time close loans. During this phase, your credit score, income, debt-to-income ratio, and savings will be evaluated. In Arizona, many lenders require a minimum credit score of 620 for FHA or VA construction loans, and 680+ for conventional construction loans.
Step 2: Choose a Licensed Builder
Arizona construction lenders typically require that you work with a state-licensed, insured, and experienced builder. Your lender may have a list of approved contractors or require builder approval before loan underwriting begins.
Step 3: Submit Construction Plans and Budget
You’ll need to submit detailed plans, including:
- Architectural blueprints
- Project timeline
- Construction budget
- Land purchase agreement (if applicable)
The lender uses this information to order an appraisal based on future value, also known as an “as-completed” appraisal.
Step 4: Loan Closing
Once approved, you’ll sign loan documents during a single closing. After this, construction can begin. You’ll typically make interest-only payments during the construction phase.
Step 5: Construction Phase
As the home is built, the lender disburses loan funds in phases, known as “draws,” based on the project’s progress. Inspections are completed before each draw to confirm construction milestones are met.
Step 6: Automatic Conversion to Permanent Mortgage
Once the home is finished and a final inspection is complete, your construction loan automatically converts into a permanent mortgage without another closing or requalification.
Loan Types Available for One-Time Close Construction in Arizona
Different loan types are available depending on your financial situation and eligibility.
FHA One-Time Close Construction Loan
- Backed by the Federal Housing Administration
- Lower down payment (as little as 3.5%)
- Minimum credit score: 620
- Ideal for first-time homebuyers or buyers with less-than-perfect credit
VA One-Time Close Construction Loan
- Available to eligible veterans, active-duty service members, and surviving spouses
- No down payment required
- No monthly mortgage insurance
- Great option for building in Arizona’s rural or suburban areas
Conventional One-Time Close Construction Loan
- Requires higher credit score (typically 680+)
- Down payment ranges from 5% to 20%
- Better rates for borrowers with strong financial profiles
One-Time Construction Loan Requirements in Arizona
To qualify for a one-time close loan in Arizona, you’ll need to meet both borrower and builder requirements. Here are some common ones:
Borrower Requirements:
- Minimum credit score (varies by loan type)
- Proof of income and employment
- Debt-to-income ratio under 45%
- Sufficient savings for down payment and reserves
Builder Requirements:
- Licensed and insured in Arizona
- Approved by the lender
- Track record of completing similar projects
Property Requirements:
- Residential, owner-occupied homes only
- Must meet Arizona building codes
- Appraisal must support final home value
Popular Cities in Arizona for One-Time Close Construction Loans
Arizona offers a diverse range of locations to build a new home. Some of the most popular cities for new construction using one-time close loans include:
- Phoenix – Arizona’s fastest-growing metro area with expanding suburban developments
- Tucson – Affordable land prices and family-friendly communities
- Flagstaff – Scenic mountain settings and cooler climate
- Prescott – Popular for retirees building custom homes
- Queen Creek and Buckeye – Booming outer suburbs with new lots
Tips for Success When Applying for a One-Time Construction Loan in Arizona
- Start early: The approval process can take 30–60 days.
- Work with experienced professionals: Choose a lender and builder familiar with Arizona construction loans.
- Understand the timeline: Construction typically takes 6–12 months.
- Keep your credit stable: Avoid large purchases or new credit inquiries during the loan process.
- Communicate often: Regular updates with your builder and lender will keep the process smooth.
Is a One-Time Construction Loan Right for You?
If you’re planning to build a custom home in Arizona and want to avoid the hassle of multiple closings, a one-time close construction loan may be the perfect solution. It simplifies your financing, locks in your interest rate, and saves money on fees — all while helping you build the home of your dreams.
Final Thoughts
One-time construction loans in Arizona offer a streamlined, cost-effective way to finance both building and owning your dream home. Whether you’re constructing in the desert, foothills, or mountain regions, this loan option gives you flexibility, peace of mind, and long-term value.
If you’re ready to take the next step, reach out to a trusted Arizona mortgage lender who specializes in one-time close loans and understands the unique housing landscape of the Grand Canyon State.
