Brokers Shift to One‑Time Close Construction Loans as Montana DOE Loan Restarts and Regional Bank Posts Strong Quarter

Brokers chase construction and down‑payment assistance leads as one‑time close loans gain traction; large Montana DOE loan unfrozen and regional bank posts solid quarter

A growing rush by mortgage brokers and loan officers toward one‑time close construction loans is emerging as an important development for new home building and first‑time buyers, just as a major federal loan to expand renewable fuels capacity in Montana has been restarted and a regional bank reported strong second‑quarter earnings.

Why brokers see a near‑term opportunity

First‑time buyers continue to face pressure from elevated mortgage rates and tight household budgets, and although housing inventory has increased, new home construction has slowed. That gap is opening a pocket of demand for construction lending. A regional wholesale lender now offers one‑time close construction loans across FHA, VA, USDA and conventional products and reports steady weekly interest from brokers and consumers.

The lender receives at least ten new weekly inquiries about construction loans and down‑payment assistance, and many potential buyers express a desire to build homes from scratch. Brokers are being advised to learn these programs because offering construction lending can provide a competitive edge and steady commissions at the closing stage instead of waiting for a second refinance close after construction.

How the one‑time close product changes the deal

In a traditional two‑time close, the mortgage originator faces the risk that the borrower will not qualify for the permanent loan once construction finishes. The one‑time close structure removes that touchdown point by funding construction and converting to the permanent loan without a new closing event. That reduces borrower closing costs, eases lender underwriting worries about requalification, and means brokers are paid at the single closing rather than only at project completion.

From a borrower’s paperwork standpoint, aside from obtaining an approved builder, the process looks similar to buying an existing home. Some programs require no mortgage payments during construction—for example, certain government products allow months of no payments—while most conventional construction loans require interest‑only payments during the build period.

Key program features affecting affordability

• FHA construction typically requires 3.5% down on new construction and may allow no payments during construction periods ranging from six to 12 months depending on the program.
• VA dirt‑up construction can finance 100% of a new build, offering the potential for $0 out‑of‑pocket financing for eligible veterans.
• USDA construction options can similarly enable zero‑down financing in eligible rural areas.
• Conventional construction loans often call for interest‑only payments through the construction term and then convert to permanent financing.

Operationally, construction loans require coordination between underwriting and an internal construction department. Originators handling these deals must ensure both sides receive complete documentation so items can be cleared for both underwriting and construction oversight.

Montana Renewables loan pause lifted; project moves forward

A federal loan guarantee totaling $1.44 billion for a renewable fuels expansion in Montana was briefly on hold but has been released for funding activity. Initial funding of about $782 million was made available toward eligible expenses, and the remaining guaranteed loan balance is structured as a delayed draw for construction through a multi‑year buildout expected to continue into 2028.

The project aims to expand sustainable aviation fuel capacity to 300 million gallons per year and about 330 million gallons of combined SAF and renewable diesel. The build plan includes a second reactor that could bring roughly half of the SAF capacity online by 2026, plus upgrades for hydrogen production, cogeneration, blending and on‑site water treatment.

The federal funding pause was part of a broader review of previously approved energy loans to ensure alignment with current policy priorities. The financing package includes principal and capitalized interest that sum to a total estimated loan facility value of about $1.67 billion. The company plans additional equity investments and expects tranche disbursements during construction beginning in 2025.

Local tax and regulatory actions tied to the project

The parent company applied for a new county tax abatement on about $6.1 million of equipment placed into service in 2024. The project also has a series of pending tax appeals concerning prior years and a dispute with state environmental regulators over what portion of the facility qualifies as tax‑exempt pollution control equipment. Hearing dates are being scheduled as the parties continue discussions.

Regional bank posts solid Q2 results

A Montana bank holding company reported net income of $3.2 million in the second quarter of 2025, matching the prior quarter and showing a notable year‑over‑year increase from the same quarter in 2024. For the first six months of 2025, net income rose to $6.5 million versus $3.6 million the prior year. The board declared a quarterly cash dividend of $0.145 per share, payable in September.

Total assets were reported at about $2.14 billion. Loan growth was concentrated in commercial real estate and agricultural loans, while residential mortgage and construction loan balances declined modestly year over year. Net interest margin expanded to 3.91% in Q2 and mortgage banking income increased, driven by higher gains on loan sales. The company recorded a $1.0 million provision for credit losses during the quarter and maintains capital levels above regulatory requirements.

What this means for builders, brokers and buyers

For builders and brokers, the uptick in one‑time close products offers a pathway to reduce fall‑out risk and to capture sales that might otherwise be lost in a two‑close environment. For buyers, particularly first‑time and credit‑sensitive households, the programs can lower initial cash needs and cut closing costs tied to multiple transactions. Coordination, documentation and builder approvals remain the key practical hurdles to move deals from inquiry to funded construction.

Key features at a glance