Cornerstone Home Lending

Construction Loans in Utah

Finance your dream home from the ground up. Whether you're building on your own lot or starting fresh, we'll guide you through every stage of the construction lending process.

What Is a Construction Loan in Utah?

A construction loan in Utah is a short-term loan that covers the cost of building a new home. Unlike a traditional mortgage, funds aren't disbursed all at once — they're released in stages called draws as construction progresses through each milestone. If you're looking to build a home in Utah, this is the financing solution designed for you.

Once the home is complete, the loan either converts to a permanent mortgage automatically (one-time close) or is paid off with a separate mortgage (two-time close). Construction loans in Utah are designed to protect both you and the lender throughout the building process.

Types of Construction Loans

One-Time Close (Construction-to-Permanent)

A single loan with a single closing that covers both the construction phase and your permanent mortgage. This is the most popular option for most borrowers.

  • One loan, one closing — saves time and money
  • Covers both construction and permanent financing
  • Lock your permanent interest rate upfront
  • Only one set of closing costs
  • Best option for most borrowers building a new home

Two-Time Close

Separate construction loan and permanent mortgage with two distinct closings. Offers more flexibility but comes with higher total costs.

  • Two closings with two sets of fees
  • Shop for the best permanent rate after building is complete
  • More flexibility on permanent loan terms
  • Higher total closing costs than one-time close

Renovation / Rehab Loans

For major renovations on existing homes rather than new construction. Finance your purchase and renovation costs in a single loan.

FHA 203k Loans →HomeStyle Renovation →

How It Works

Building a home is a process — and so is the loan. Here's what to expect from start to finish.

1

Get Pre-Approved & Select Your Builder

We'll review your finances and issue a pre-approval. Then you'll choose a qualified licensed builder to work with.

2

Submit Plans, Specs & Budget

Your builder submits detailed construction plans, specifications, and a complete cost breakdown for underwriting review.

3

Close on the Construction Loan

Once approved, you'll close on the loan. Funds are held in escrow and released as construction milestones are met.

4

Builder Draws Funds at Each Milestone

As work progresses — foundation, framing, roof, mechanical, finish — your builder requests draws. An inspector verifies each stage before funds are released.

5

Final Inspection & Permanent Mortgage

After the final inspection and certificate of occupancy, the loan converts to your permanent mortgage (one-time close) or you close on your permanent loan (two-time close).

Benefits of a Construction Loan

Build Exactly What You Want

Design your dream home from scratch — choose the layout, finishes, and features that fit your lifestyle.

Interest-Only During Construction

Pay only interest on funds disbursed during the building phase, keeping your payments low until move-in.

Lock Your Rate From Day One

With a one-time close loan, lock in your permanent mortgage rate before construction even begins.

Finance Land & Construction Together

Roll the cost of your lot and construction into a single loan — no need for separate land financing.

Low Down Payment Options

Down payments as low as 5% on select programs, making new construction more accessible than ever.

What You'll Need

Construction loans require more documentation than a standard mortgage. Here's what to have ready:

  • Qualified licensed builder or general contractor
  • Detailed construction plans and specifications
  • Complete construction budget and cost breakdown
  • Building permits (or proof they can be obtained)
  • Good credit — typically 680+ score
  • Land ownership documentation or purchase contract for the lot

Explore Related Utah Loan Programs

Building a home in Utah isn't your only option. Explore these related programs:

Home Purchase LoansRenovation Loans

Frequently Asked Questions

How long does a construction loan last?+
Most construction loans have a build period of 12 months, though some can extend to 18 months depending on the scope of the project. Once construction is complete, the loan converts to a permanent mortgage (one-time close) or is paid off by a separate mortgage (two-time close).
Can I be my own builder?+
Most construction loan programs require a licensed general contractor or builder. Owner-builder arrangements are rarely permitted because lenders need assurance that the project will be completed on time, on budget, and to code. Talk to us about your situation — we can help you find the right solution.
What happens if construction costs exceed the budget?+
Cost overruns are the borrower's responsibility. That's why a detailed budget and a contingency reserve (typically 5–10%) are built into every construction loan. If costs go significantly over budget, you may need to cover the difference out of pocket or negotiate with your builder. We'll help you plan upfront to minimize surprises.
Can I use a VA or FHA construction loan?+
Yes. Both VA and FHA offer one-time close construction loan programs. VA construction loans allow eligible veterans to build with no down payment, and FHA construction loans are available with as little as 3.5% down. These programs have specific builder requirements and approval processes — reach out to us and we'll walk you through the details.

Planning to Build?

Let us help you navigate the construction loan process and find the right financing for your new home build.

Start Your Application

Questions about construction loans?

(801) 820-7620

Pro Tip: Start with your builder selection early. Having an approved, licensed contractor lined up before applying will speed up your construction loan approval significantly.