Building a custom home in Utah? You're not alone — residential construction in Utah is booming, especially in Salt Lake County, Utah County, and the Wasatch Front. But financing a build is different from buying an existing home. You need a construction-to-permanent loan (also called a "one-time close" or C2P), and understanding how it works can save you thousands in fees and interest.
A construction-to-permanent loan is a single mortgage that covers two phases:
The key advantage: one application, one appraisal, one set of closing costs. You're not doing two separate loans and two closings (which is called a "two-time close" — avoid it unless you have no choice).
During construction, your lender disburses money as work gets done. Here's the typical flow:
Your builder requests a draw, the lender sends an inspector to verify work is complete, and then the funds are released. This continues until "substantial completion" — typically when the home passes final inspection.
Interest during construction: You only pay interest on the amount that's been drawn. If $200,000 of a $500,000 home is built, you're paying interest on $200,000, not the full loan amount. This saves significant money compared to constructing with a traditional loan.
Because construction loans carry more risk (they're tied to the build schedule, not an existing appraisal), rates are typically 0.25–0.5% higher than a traditional 30-year mortgage.
The beauty: when the loan converts to permanent at the end of construction, the rate is locked in (assuming you kept the rate lock active). No surprises, no refinancing.
Most banks don't like construction loans — they're messy, require inspections, and tie up capital during the build. Brokers have access to 100+ wholesale lenders that specialize in construction financing. Here's what that means for you:
Pro tip for Utah builders: If you're using a builder in Salt Lake, Utah Valley, or Park City, we likely have a relationship with them already. That means smoother draws, faster approvals, and fewer surprises during construction.
Let's say you're building a $550,000 home with an 18-month timeline:
Compare that to a "two-time close" (construction loan + refinance at completion):
Bottom line: One-time close saves you ~$8,250 in duplicate closing costs. That's real money, and it's why C2P is standard for any serious builder.
We work with Utah builders daily. Get pre-approved for your construction loan and lock in your rate before prices move.
Start Your Pre-Qual →A construction-to-permanent loan is the smart way to finance a custom build in Utah. You get one application, one appraisal, one set of closing costs, and a locked-in permanent rate at the end. The alternative — two separate loans and two closings — is expensive and unnecessary.
Start with a pre-qual. I'll walk you through the numbers, explain the builder relationship, and make sure your construction financing is locked down before you break ground.