Single Close Construction Loans in Charleston, SC

Charleston, South Carolina, often called the Holy City, is a vibrant coastal city known for its historic charm, cultural richness, and booming real estate market. Whether you’re drawn to the cobblestone streets of downtown Charleston or the modern developments in North Charleston, building your dream home in this region is an exciting prospect. A single close construction loan offers a streamlined and cost-effective way to finance the construction of your new home and transition seamlessly into a permanent mortgage. Unlike traditional construction loans that require separate loans and multiple closings, a single close construction loan combines both the construction and long-term mortgage into one loan, simplifying the financing process. In this article, Bob Fabian with GO Mortgage explores the ins and outs of single close construction loans in Charleston, SC, to help you navigate the path to your new home.

What Is a Single Close Construction Loan?

A single close construction loan, also known as a one-time close loan, is a financing option that funds both the construction phase and the permanent mortgage in a single loan. This eliminates the need for separate loans, reducing paperwork, closing costs, and the complexity of requalifying for a permanent loan after construction. For Charleston residents looking to build a primary residence, this loan type offers a streamlined approach to home construction, making it easier to create a dream home tailored to your lifestyle.

Why Choose a Single Close Construction Loan in Charleston?

Charleston’s unique blend of historic architecture, coastal beauty, and modern amenities makes it an ideal location for custom-built homes. A single close construction loan provides several advantages for borrowers in the Holy City:

• One Set of Closing Costs: Pay closing costs only once, unlike traditional construction loans that require multiple closings.
• Simplified Financing Process: A single loan reduces paperwork and streamlines the application process.
• Seamless Transition: Once construction is complete, the loan converts to a permanent mortgage without additional qualification.
• Cost-Effective Solution: By combining construction financing and the permanent loan, you save on fees and interest over time.

Whether you’re building in the heart of Charleston or the growing suburbs of North Charleston, this loan type is designed to make your home construction project more manageable.

The Construction Phase Explained

The construction phase is the period when your home is built, typically lasting 6 to 18 months, depending on the complexity of the construction project. During this phase, funds from the single close construction loan are disbursed to your reputable builder to cover labor, materials, and other construction costs. In Charleston, where the Charleston City Council enforces specific building codes to preserve the city’s aesthetic and safety standards, working with a knowledgeable builder ensures compliance and keeps your project on schedule.

Interest Rates and Payments During Construction

During the construction phase, borrowers typically make interest-only payments on the funds disbursed. This structure keeps monthly payments lower, allowing Charleston families to manage finances while their dream home takes shape. Interest rates for single close construction loans vary based on the loan type, your credit score, and market conditions. Conventional loans may have slightly higher rates than government-backed options like FHA loans, but working with the right lender ensures you secure a competitive rate tailored to your needs.

Minimum Credit Score Requirements

Lenders typically require a minimum credit score for single close construction loans to ensure borrowers can manage the loan. For conventional loans, a credit score of 680 or higher is often required, though some lenders may accept lower credit scores for FHA single close loans, sometimes as low as 620. In Charleston’s competitive real estate market, maintaining a strong credit profile is crucial for securing favorable loan terms and building your dream home.

Down Payment and Loan-to-Value Ratio

The down payment for a single close construction loan depends on the loan type and lender. Conventional loans typically require 5–20% of the total project cost, while FHA loans may require as little as 3.5%. The loan-to-value (LTV) ratio, which compares the loan amount to the appraised value of the property, is also a key factor. For example, an LTV of 80% means the loan covers 80% of the project cost, with the borrower providing the remaining 20%. In Charleston, where property values are rising, a higher down payment may be required for larger projects to maintain a favorable LTV ratio.

Government-Backed Loan Programs

Charleston borrowers can explore government-backed loan programs, such as FHA and VA single close construction loans, which offer unique benefits:

• FHA Single Close Loans: These require lower down payments (as low as 3.5%) and are more lenient with lower credit scores, making them ideal for first-time home builders.
• VA Single Close Loans: Available to eligible veterans and active-duty military, these loans offer no down payment and competitive interest rates, perfect for Charleston’s military community.

These programs make home construction more accessible for families looking to build a primary residence in the Holy City.

The Role of a Reputable Builder

Choosing a reputable builder is critical to the success of your construction project. In Charleston, builders must adhere to strict regulations set by the Charleston City Council, especially for homes in historic districts. Your builder will work closely with your lender to create a detailed construction contract, outlining the scope of work, timeline, and budget. Funds are disbursed according to the construction schedule, ensuring materials and labor are paid for as the project progresses.

Closing Costs and the Closing Process

Closing costs for a single close construction loan include lender fees, title insurance, appraisals, and other administrative expenses. Since you pay closing costs only once, this loan type is more cost-effective than traditional construction loans. The closing process involves signing the loan agreement, reviewing the construction contract, and finalizing the budget for the total project cost. In Charleston, where coastal weather like freezing rain can impact construction timelines, a thorough closing process ensures all parties are prepared for a smooth build.

Income Verification and Documentation

To qualify for a single close construction loan, lenders require thorough income verification to confirm your ability to repay. Common documents include:

• Recent pay stubs
• Tax returns for the past two years
• Bank statements showing savings and financial stability

For Charleston borrowers with income from local businesses, such as tourism or real estate, additional documentation may be needed to verify income consistency. Working with a lender like GO Mortgage ensures the financing process is tailored to your financial situation.

Total Project Cost Breakdown

The total project cost for your Charleston home includes:

• Land Purchase: If you don’t own land, this is a significant expense, especially in high-demand areas like downtown Charleston.
• Construction Costs: Labor, materials, and permits required to build your home.
• Contingency Reserve: Typically 10–15% of the budget to cover unexpected costs, such as delays due to Charleston’s occasional freezing rain.
• Closing Costs: Fees associated with finalizing the loan.



A single close construction loan covers all these expenses, providing a single source of financing for your construction project.

Navigating Charleston’s Real Estate Market

Charleston’s real estate market is thriving, with demand for new homes in both historic downtown and growing areas like North Charleston. The city’s appeal lies in its blend of Southern charm, cultural events, and proximity to beaches. However, building a home in Charleston requires careful planning due to strict zoning laws and environmental considerations, such as flood zones. A single close construction loan simplifies the financing process, allowing you to focus on creating a home that fits your vision.

Benefits of a Single Loan Over Separate Loans

Unlike traditional construction loans, which require a separate construction loan and permanent mortgage, a single close construction loan combines both into one. This eliminates the need to requalify for a permanent loan after construction, reducing paperwork and stress. For Charleston borrowers, this means more time to focus on selecting the perfect builder and designing a home that complements the Holy City’s aesthetic.

Construction Financing Process in Charleston

The construction financing process for a single close loan involves several steps:

1. Pre-Approval: Work with your lender to assess your credit, income, and eligibility.
2. Construction Contract: Submit a detailed contract from your builder, outlining costs and timelines.
3. Appraisal: The lender appraises the future value of the completed home.
4. Loan Approval: Once approved, you begin construction, with funds disbursed as needed
5. Loan Conversion: After construction, the loan converts to a permanent mortgage.

In Charleston, where construction projects must account for local weather patterns and zoning regulations, this process ensures your project stays on track.

Why Charleston, SC, Is Ideal for Home Construction

Charleston, often referred to as the Holy City, is a top destination for homebuyers due to its rich history, vibrant culture, and economic growth. From the historic charm of downtown to the modern developments in North Charleston, the city offers diverse neighborhoods for building your dream home. Despite occasional challenges like freezing rain or violent incidents, Charleston’s strong community and top priorities—like preserving its historic beauty—make it an ideal place to build with a single close construction loan.