What is a construction loan?

A construction loan is short-term financing that pays your builder in stages (draws) as construction progresses. When the home is complete, the loan converts to — or is replaced by — a permanent mortgage.

What is a one-time-close construction loan?

A one-time-close (OTC) construction-to-permanent loan combines the construction loan and the final mortgage into a single transaction with one set of closing costs and one set of approvals. It locks the permanent rate up front.

How much down payment is required?

Typically 20% down on conventional construction loans. VA, USDA, and FHA construction options exist with lower down payments and are available through select Utah lenders.

How do construction draws work?

The lender releases funds in stages as construction milestones are completed (foundation, framing, drywall, finish, etc.). An inspector verifies each milestone before the next draw is disbursed to the builder.

Do I make payments during construction?

Yes — usually interest-only payments on the disbursed balance during the construction period (typically 6–12 months). Full principal-and-interest payments begin after conversion to permanent financing.

Can I be my own builder in Utah?

Some lenders allow owner-builder loans, but most require a licensed Utah general contractor. Owner-builder programs have stricter equity, credit, and experience requirements.

What is a construction loan?

A construction loan is short-term financing that pays your builder in stages (draws) as construction progresses. When the home is complete, the loan converts to — or is replaced by — a permanent mortgage.

What is a one-time-close construction loan?

A one-time-close (OTC) construction-to-permanent loan combines the construction loan and the final mortgage into a single transaction with one set of closing costs and one set of approvals. It locks the permanent rate up front.

How much down payment is required?

Typically 20% down on conventional construction loans. VA, USDA, and FHA construction options exist with lower down payments and are available through select Utah lenders.

How do construction draws work?

The lender releases funds in stages as construction milestones are completed (foundation, framing, drywall, finish, etc.). An inspector verifies each milestone before the next draw is disbursed to the builder.

Do I make payments during construction?

Yes — usually interest-only payments on the disbursed balance during the construction period (typically 6–12 months). Full principal-and-interest payments begin after conversion to permanent financing.

Can I be my own builder in Utah?

Some lenders allow owner-builder loans, but most require a licensed Utah general contractor. Owner-builder programs have stricter equity, credit, and experience requirements.

Utah Construction Loans | One-Time-Close & Builder Financing Guide

By Tres Miller · Mortgage Banker · NMLS #217768

Reviewed June 22, 2026 · 31+ years lending in Utah

Quick Answer

A construction loan funds your build in stages and either converts into a permanent mortgage at completion (one-time-close) or is replaced by a separate permanent loan (two-time-close). One-time-close is usually the lower-cost, lower-risk path.

Overview

Construction financing is a different animal than buying an existing home. The lender funds the build progressively — in draws tied to inspections — and the loan structure has to plan for both the construction period and the long-term mortgage that follows.

Utah's strong new-construction market (St. George, Washington County, Eagle Mountain, Saratoga Springs, Heber Valley, Cache Valley, the Wasatch Back) means construction loans are a core financing tool here. Choosing the right structure up front saves significant cost and stress.

Who it's for

Buyers building a custom home on a Utah lot they own or are purchasing
Move-up buyers building in master-planned communities (Daybreak, Suncrest, Promontory)
St. George / Washington County buyers in custom-home subdivisions
Cache Valley, Heber Valley, and Wasatch Back custom builds
Buyers using an FHA, VA, or USDA construction option where available

Key benefits

One closing covers construction + permanent financing (OTC)
Lock the permanent rate up front, before construction starts
Interest-only payments on disbursed balance during the build
Builder is paid in inspected, verified stages — protecting you
Available with conventional, jumbo, VA, and (with select lenders) FHA / USDA structures

Common requirements

Typical 20% down on conventional construction loans (less for VA/USDA/FHA)
Credit score generally 680+; 700+ for best pricing; higher for jumbo construction
Detailed construction contract, plans, specifications, and budget
Licensed Utah general contractor (most lenders) or qualifying owner-builder approval
Builder approval — lender vets the contractor's financial and project history
Realistic build timeline (typically 6–12 months) with contingency

Utah-specific considerations

Utah's permitting timelines vary widely by city — Eagle Mountain and Saratoga Springs move faster than Park City or Salt Lake. Build permit time into the construction period.
Lot loans (for buying land before you build) are common in Utah and can roll into a construction loan; coordinating the lot purchase and construction financing up front avoids double closings.
Custom builds in Summit and Wasatch Counties often require jumbo construction financing — fewer Utah lenders offer this, so lock in the lender before committing to a builder.
Utah winter construction is normal but slows draws on exterior work; plan the schedule with the builder and lender in mind.