Building a custom home often feels like a logistical puzzle, but One Time Close Construction Loans have simplified the path for thousands of families. Unlike traditional methods that require two separate loan applications and two sets of closing costs, the GMFS Mortgage model allows you to lock in your interest rate and finalize your financing before the first shovel hits the ground.
Whether you are looking to build in rural Louisiana or a modern family home in a suburban development, the 2026 lending market offers specialized programs that require as little as 5% down for eligible borrowers. By combining the purchase of the land, the construction costs, and the permanent mortgage into a single financing vehicle, you eliminate the risk of interest rate hikes during the build phase and reduce your total out-of-pocket expenses.
The following guide breaks down the core requirements, program types, and step-by-step phases of financing your build with GMFS.
What is a One Time Close Construction Loan?
A One Time Close Construction Loan is a specialized mortgage that finances the construction of a new home and then automatically transitions into a permanent mortgage once the build is complete. At closing, the borrower signs just one set of documents, which covers the land acquisition, the raw materials, the labor, and the final 30-year or 15-year home loan.
For most borrowers in 2026, the primary advantage is rate protection. Traditional "two-close" loans require you to finance the construction with a short-term, interest-only loan and then apply for a new mortgage when the house is finished. If interest rates rise during the 9 to 12 months it takes to build, your final monthly payment could be significantly higher than expected. With the GMFS One Time Close Construction Loan, your rate is locked before construction starts, providing financial certainty from day one.
Furthermore, this single-closing structure significantly reduces closing costs. Because you only pay for one appraisal, one credit report, and one set of title fees, building with a one-time close loan eliminates the duplicated administrative fees typical of traditional two-close financing. By streamlining the process, GMFS Mortgage helps homeowners preserve their cash reserves for upgrades, furniture, or landscaping.
Which loan programs are available?
GMFS offers several loan programs designed to meet different financial needs.
Loan Comparison Table
Loan Type | Minimum Down Payment | Best For | Requirement |
|---|---|---|---|
VA | 0% Down | Veterans and active-duty military | Must have valid Certificate of Eligibility (COE). |
USDA | 0% Down | Rural builds in designated zones | Household income must be below the local median limit. |
FHA | 3.5% Down | First-time custom home builders | Property must be used as a primary residence. |
Conventional | 5% - 20% Down | Borrowers with high credit scores | Higher equity allows for the eventual removal of PMI. |
Regardless of the program chosen, every construction loan at GMFS Mortgage requires the builder to be "GMFS approved." This vetting process ensures that the contractor has the necessary licensing, insurance, and professional standing to complete the project on time and within budget. This layer of oversight protects the lender's investment and the homeowner's future equity.
Builder Vetting Requirements
Completed GMFS Contractor Form
Verification of Contractor’s License with the State Website where the house is being built
Verification of Secretary of State Certificate
General Liability Insurance and Worker’s Comp policies showing GMFS as the certificate holder
Signed Contract between the borrower and the builder
How does the construction mortgage process work?
The construction-to-permanent loan process is divided into three distinct stages: pre-approval, the construction phase, and the conversion to a permanent mortgage. Each stage has unique requirements to ensure the project remains financially viable and the builder remains focused on quality.
During the initial pre-approval stage, you will need to provide standard financial documentation such as tax returns, bank statements, and pay stubs. However, unlike a standard home purchase, you also need to submit a contract with an approved builder and a detailed set of plans and specs. An appraiser will then value the home based on its "as-completed" state. This ensures that the loan amount aligns with the future value of the property once it is fully built.
Once the loan is closed, the construction phase begins. In this stage, funds are not disbursed as a lump sum. Instead, GMFS utilizes a draw schedule to release funds in stages as specific milestones are reached (e.g., foundation poured, framing complete, dry-in). For example, a typical one-time close loan may involve five to seven separate draws. An inspector will visit the site before each draw to verify that the work has been completed according to the agreed-upon plans.
Finally, the modification phase occurs after the local municipality issues a Certificate of Occupancy. At this point, the interest-only payments you made during construction transition into full principal and interest payments. Because you utilized a one-time close loan with GMFS Mortgage, this transition happens automatically without requiring a second loan closing or additional underwriting. You simply move in and begin your permanent mortgage term.
Summary Checklist: Preparing for Your Build
Select your land: Ensure the lot is buildable and has access to necessary utilities or a plan for septic/well.
Find an approved builder: Ensure your contractor is on the GMFS approved list or is willing to go through the vetting process.
Finalize plans and specs: You need a detailed "blue book" of materials and floor plans before the appraisal.
Get pre-approved early: Construction loans have stricter debt-to-income requirements than standard purchases, so knowing your limit is vital.
Can you finance a barndominium with a construction loan?
A significant trend in 2026 is the surge in popularity of barndominiums—highly durable, steel-frame homes that combine living quarters with large workshop or garage spaces. While many traditional banks are hesitant to finance these unique structures, GMFS Mortgage provides specialized construction loans tailored for "barndos."
Building a barndominium often carries a lower cost-per-square-foot than traditional stick-built homes, but lenders still require the home to be used as a primary residence. Loans for these builds follow the same one-time close structure as standard homes, meaning you can lock in your long-term rate before the steel building kit arrives on-site.
Successful barndominium financing requires a clear appraisal strategy. Because the appraiser must find "comparable sales" (comps) in the area, it is often helpful to build in regions where other metal-frame or non-traditional homes have recently sold. GMFS loan officers work closely with borrowers to identify the documentation needed to justify the property's value, ensuring that the loan-to-value ratio stays within acceptable limits for FHA or VA programs.
Frequently Asked Questions
The eligibility and structure of a construction loan depends largely on your builder's standing and your chosen loan program. According to GMFS Mortgage guidelines, most construction-to-permanent loans are designed to mitigate risk by ensuring professional oversight and protective draw schedules throughout the build.
Can I build the home myself as the general contractor?
Most construction-to-permanent programs, including those offered by GMFS, require you to work with a vetted and professional builder. Lenders generally prohibit "occupant-builders" or do-it-yourself projects because of the high risk of delays, cost overruns, and code violations that could jeopardize the property's value.
Can I include the cost of the land in the construction loan?
Yes. If you do not already own the land, the construction loan can be used to purchase the lot from the current owner. If you already own the land, the equity in that land can often be counted toward your down payment requirement, which is a significant advantage for families who have inherited property or purchased land in cash.
What happens if construction takes longer than expected?
One-time close loans typically have a defined construction period, often 9 to 12 months. If your builder experiences delays, it is possible to request a loan extension. However, it is essential to communicate with your loan officer early, as extensions may involve small fees to maintain the rate lock or cover additional interest-only periods.
What is the minimum credit score for a GMFS construction loan?
Credit requirements vary by program. Since construction loans are considered higher risk than standard purchases, maintaining a stable credit profile during the pre-approval phase is critical to staying within your locked interest rate.
Connect with me to learn more about our One Time Close Construction Loans.
Stephanie Machado Barto | NMLS #71339 | Branch Manager | Senior Loan Officer
GMFS LLC is an Equal Housing Lender. All mortgages originated by GMFS LLC at 7389 Florida Blvd Suite 200A Baton Rouge, LA 70806. NMLS #64997. Not a commitment to lend. All loans subject to credit and property approval. Branch is located at 119 Terra Bella Blvd | Covington, LA 70433 | Branch NMLS #881184
