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

Mortgage brokers see a fresh opening in construction lending as buyers struggle; large Montana energy loan moves forward

Mortgage brokers and loan officers are moving toward construction lending as a new way to win business while first‑time buyers continue to face a tough market. High mortgage rates and tight household budgets have made buying move‑in ready homes difficult for many buyers, and while housing inventory has risen, new home building has slowed. That opens a niche for brokers who can offer one‑time close construction loans and help borrowers tap down‑payment or zero‑down programs.

Why brokers are watching construction loans

Lenders that handle the entire mortgage from build start to move‑in can reduce risk for brokers and borrowers. With a one‑time close, the construction phase and the permanent mortgage are combined into a single loan that closes once. Brokers are paid at that closing and do not have to wait for a second refinance after construction is finished, which lowers the chance the deal falls apart if borrower credit or income shifts during building.

Wholesale lender regional managers report steady weekly interest in construction financing. Many calls now ask about construction and down‑payment assistance options. A lender that handles multiple agency programs for new construction — FHA, VA, USDA and conventional — and has an in‑house construction team can streamline the process for brokers and reduce friction between underwriting and construction oversight.

Practical borrower benefits and program details

From a buyer’s point of view, building a new home through a one‑time close looks much like buying an existing home, apart from internal steps used by underwriting and construction teams. Some programs do not require monthly payments during the build period, while others require interest‑only payments. Specific program rules vary: FHA construction loans typically require a 3.5% down payment and may allow several months of no payments during construction. VA and USDA options can permit 100% financing for qualifying dirt‑up construction, potentially allowing eligible borrowers to enter with no cash outlay for the mortgage.

For brokers, the key operational difference is ensuring both loan underwriters and construction specialists receive complete documentation on time. Construction lending is best described as a coordinated process between two internal teams that must clear requirements for the loan to fund and then move to the permanent phase without a separate refinance.

Market opportunity for loan officers

Loan officers who learn to handle construction programs can stand out from competitors who focus on standard purchase loans. Building expertise in these more complex deals can help officers capture buyers who want to build from scratch and lenders seeking diversified originations. Because originators can earn fees at the single closing, one‑time close loans are attractive to brokers looking for reliable compensation and lower fallout risk compared with two‑time close structures.

Major federal loan for Montana renewable fuels unfrozen

A large loan guaranteed by the federal government to expand a renewable fuels project in Montana is back on after a temporary funding pause. The guaranteed loan totals $1.44 billion in principal with an additional $233 million of capitalized interest included in the larger loan facility. An initial draw of about $782 million was applied to eligible pre‑construction expenses, and the remaining funds are in a delayed draw to support construction that is expected to ramp up in 2025 with completion slated around 2028.

The project aims to expand sustainable aviation fuel and renewable diesel capacity to roughly 300 million gallons per year of SAF and 330 million gallons of combined products. Planned upgrades include adding a second reactor, debottlenecking, increased renewable hydrogen production, cogeneration for power and steam, and on‑site water treatment. The loan spans 15 years, with interest linked to U.S. Treasury rates plus a margin. Principal and interest servicing is expected to be deferred until project commissioning.

Local tax and permitting activity

The parent company has sought a new tax abatement at the county level for several million dollars in equipment placed into service. That request is allowed under a state law change that makes certain renewable fuels investments eligible for abatement and gives counties discretion over the level of abatement. The company also has ongoing tax appeals with state tax authorities and a dispute with the state environmental agency over how much of the facility qualifies as tax‑exempt pollution control equipment. County and state appeal processes remain active.

Regional bank posts stronger second quarter results

A Montana‑based bank holding company reported improved earnings and loan growth in the second quarter of 2025. Net income for the quarter was $3.2 million, matching the prior quarter and rising from $1.7 million a year earlier. Year‑to‑date net income rose to $6.5 million versus $3.6 million in the same period a year ago. The board declared a quarterly cash dividend to be paid in September.

Total assets reached about $2.14 billion at quarter end. Loan originations included nearly $78.6 million in residential mortgages during the quarter, with a notable increase in net interest margin to 3.91%. Commercial real estate and agricultural loans grew year over year, while certain construction and residential mortgage balances declined modestly. The bank recorded a higher provision for credit losses in the quarter and maintains an allowance for credit losses well above nonperforming loans. Management noted a shift in deposit mix toward higher‑yielding products and expected gradual repricing as certificates mature.

What this means for local markets and builders

The push toward one‑time close construction loans could help unblock some new home supply by making it easier for buyers and brokers to commit to building projects. At the same time, large federal support for a regional renewable fuels facility signals continued investment in industrial projects that can affect local tax bases and job creation. Banks reporting stronger margins and mortgage activity indicate ongoing lending capacity in the region, though caution remains around construction and credit provisions.

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