Construction-to-perm in a single close typically costs 25 to 50 basis points more than the construction phase alone but eliminates a second close, third-party costs, and refinance risk. Two-close structures (construction then separate permanent) can be cheaper but carry take-out risk if rates move adversely before stabilization.
What does the second close cost?
On a $40 million perm refinance: roughly $400,000 to $700,000 in lender fees, third-party reports, title, transfer taxes, and legal. A construction-to-perm one-close avoids most of this and locks in the take-out coupon at construction close, removing rate risk during the build.
When does two-close still win?
When the borrower expects significant NOI outperformance versus underwriting and wants to size the take-out to the higher stabilized cash flow. Two-close also wins when lock-in periods on a single-close perm would unduly restrict refinance optionality if rates fall sharply.
Sources
- Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations · Mortgage Bankers Association · 2026-Q1