One industry veteran believes brokers learning to do these difficult loans can help them thrive in any environment
First-time homebuyers continue to find the housing market challenging, as mortgage rates remain elevated and affordability is affecting the household budget. Even with an increase in housing inventory, new home construction has slowed.
Jon Eldridge (pictured top), regional manager of wholesale lender Click n’ Close, said one of the products that he hopes will spur the new home construction market is the one-close construction loan.
“We do one-time close construction lending, and we do that for FHA, VA, USDA, and conventional,” Eldridge told Mortgage Professional America. “We're the only normal wholesale lender in the country that does all four agency products. We have our own in-house construction department to help with that and to facilitate people doing that process.”
He noted that a significant portion of his weekly calls concern down payment assistance or construction loans.
“If it's not down payment assistance, I have at least 10 new inquiries a week asking about construction, because there are that many people who want to build that home from scratch,” Eldridge said. “A lot more loan officers are discovering that it's a lucrative market to be in.”
Limits the risk
For brokers who are looking to do construction loans, finding a lender willing to do a one-close loan can reduce the risk of not getting the second loan after the home is built.
“You don't have to worry about your borrowers canceling contracts on you,” Eldridge said. “They’re in, once you start. With a one-time close, the loan officers are getting paid at closing, not once the home gets finished. So it benefits them in that aspect. It benefits the consumer because they don't have to worry about having additional closing costs on the two-time close.
“It’s a little bit less risk for us, because we don't have to worry about the borrower qualifying again at the end. If you're doing a two-time close environment, you're on the hook because now you're hoping that the borrower stays clean enough to refinance that borrower down the road.”
Eldridge emphasized the importance of mortgage brokers and loan officers understanding that these types of construction loans are available and educating them on how they work.
“I think the first part is education and letting people know that those programs exist, and understanding how they operate,” he said. “And other than having to get a builder approved, there’s nothing different from the borrower perspective. There's no additional documentation we get from an FHA borrower doing a construction loan to doing a regular existing home.”
He noted that the key difference between this type of construction loan and buying an existing home is that the broker must ensure both underwriting and construction receive all necessary documentation. However, to the borrower, there really is no difference.
“It's a two-dance partner transaction, because you're going to have your underwriter, and you're going to have the construction department, and you've got to make sure you're clearing items from both sides,” Eldridge said. “Whereas traditional underwriting, you only have one. Other than that, it's no different for what the borrower sees; it's just having to get some of these different steps.”
Thrive in a tough environment
One thing that makes this type of construction loan attractive to first-time homebuyers is that, depending on the loan program used, the buyer may need as little as no money down. Some of the loans require no payments during construction, while others require interest-only payments.
“Depending on which product they're in, for example, an FHA construction loan, the borrower makes no payments while the house is being built,” Eldridge said. “So it’s six, nine, or 12 months of them not making a payment. With conventional, they're making interest-only payments.
“FHA is 3.5% down on a new construction. On a VA loan, we'll do 100% on a brand-new house, dirt-up construction. And they could come in with $0 out of their pocket and build a home from scratch. Same thing with USDA.”
Dave Krueger, a mortgage broker at Montana Family Mortgage, describes the situation as "very difficult" for new buyers, with many being "pushed out of the market." https://t.co/c4xkwnCLUm
— Mortgage Professional America Magazine (@MPAMagazineUS) July 26, 2025
Eldridge noted that these construction loans are an excellent way for his company to differentiate itself from other lenders. Similarly, being able to offer these loans gives mortgage brokers a competitive edge over other loan officers in their area.
“That's a great opportunity for that loan officer to find that out, to learn the program and promote that you know what they can do,” he said. “Loan Officers have to differentiate themselves with different things they can do well because everybody can do a vanilla loan. I always say, ‘I love doing the challenging loans, because everybody can do the vanilla stuff.’
“But when you get dealt the hard loan, do you want to take the time to figure it out? When there are lots of borrowers running around, people cherry-pick. But then what happens when it's not that environment? I think the loan officers who take the time to work those deals, regardless of where the cycle is, are the ones who can thrive in any environment.”
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
