Construction & Lot Loans in UtahFinance the Land, the Build and the Mortgage
Building gives you exactly the home you want, but the financing has more moving parts than a regular purchase: lot, builder, draws and inspections. We map it out before you sign anything so your build stays on budget and on schedule.
- One-time close options
- Lot and land financing
- Builder coordination
How do construction loans work in Utah?
A construction loan pays your builder in stages as work is completed and inspected, instead of all at once. With a one-time close loan, the same loan converts to your permanent mortgage when the home is finished. Lot loans finance land on its own if you're not ready to build yet.
Reviewed by Kenny Farshchian, NMLS #1639863Updated
Construction and land financing at a glance
| Loan | What it covers | Best for |
|---|---|---|
| One-time close (construction-to-permanent) | Lot (if needed), build and permanent mortgage in one closing | Most buyers building with a licensed builder |
| Two-time close | A short-term construction loan, then a separate mortgage | Buyers who want to shop the permanent loan later |
| Lot / land loan | The land only | Buying a lot now and building later |
| Renovation loan | Purchase or refinance plus major repairs | Remodeling an existing home instead of building |
Conventional, FHA and VA construction programs exist, but fewer lenders offer them, which is where a broker helps.
How a construction loan comes together
- 01
Get pre-approved
Know your budget for the lot, the build and your monthly payment before you commit to a builder.
- 02
Choose your builder and plans
The lender reviews your builder's license and insurance, the signed contract, plans and a line-item budget.
- 03
Appraisal and closing
The home is appraised based on the finished plans, then you close, once with a one-time close loan.
- 04
Draws during the build
Funds are released to your builder in stages after inspections confirm the work is done.
- 05
Final inspection
When the home is complete, the loan converts to your permanent mortgage and you move in.
What to have ready
Construction lenders underwrite you, your builder and the project. Having these ready speeds up approval and protects your timeline.
- A signed construction contract with a licensed, insured builder
- Plans, specifications and a detailed cost breakdown
- A contingency reserve for overruns. Many lenders require one.
- Proof of lot ownership, or the lot purchase contract
- Your usual income, asset and credit documents
Construction Loan Questions
A one-time close (construction-to-permanent) loan covers the land if needed, the build and your long-term mortgage with a single application and one closing. When construction finishes, it converts to a regular mortgage without a second closing.
It depends on the program. Conventional construction loans often require 5% to 20% down, while FHA and VA versions allow lower down payments for qualified buyers. If you already own your lot, the equity in it can often count toward your down payment.
Land loans usually require more down than home loans, often 20% or more, and terms are shorter. Requirements depend on whether the lot has utilities, road access and approved plans.
Most construction lenders require a licensed and insured builder with a signed contract and detailed plans and budget. Owner-builder financing is rare and harder to qualify for.
Approval usually takes several weeks because the lender reviews your builder, plans and an appraisal based on the finished home. The build itself typically runs from several months to a year, with funds paid to your builder in stages.
Planning to build?
Talk with us before you sign with a builder. We'll show you which construction programs fit your plans and budget.