Herriman Mortgage Rates

Herriman Mortgages: The Short Version

Herriman sits at the southwest edge of the Salt Lake Valley, where the buildable ground still is, and it is one of Utah’s fastest-growing cities. A large share of our clients here are not buying a house. They are building one, custom or semi-custom, on their own lot.

That is a different product. In the structure most people are handed, the two-close construction loan. You qualify for a mortgage twice, the second time after the house is finished. Avoiding that second approval is the entire reason the one-time close exists.

The One-Time Close: One Closing, One Approval, One Set of Costs

A one-time close, construction-to-permanent, or single-close, means you sign once, before a shovel moves. That closing establishes both the construction financing and the permanent mortgage behind it. When the certificate of occupancy issues and the final inspection clears, the loan converts: the note modifies into its permanent amortizing term and you begin principal-and-interest payments on a mortgage approved months earlier.

One set of closing costs. A two-close charges a full set of title, escrow, recording and lender fees at the construction closing, then a second full set nine to twelve months later, usually including a second title policy and appraisal. Utah has no transfer tax, but paying premiums, lender fees and prepaids twice on one house is real money.

The trade-offs are honest: fewer lenders offer these, builder review is stricter, and the permanent rate may price slightly above a comparable purchase loan. We shop several against each other rather than defaulting to the bank your builder knows. Call 801-576-9336.

The Requalification Risk in a Two-Close Construction Loan

If you read nothing else on this page, read this.

In a two-close you get a short-term construction loan: usually twelve months, interest-only, often floating. When the house is done it matures and comes due in full. You do not get to keep it. You must go get a permanent mortgage to pay it off, which means applying again, being underwritten again, appraising again and closing again, judged on the facts as they exist then:

• Rates move. If long-term rates rose a point and a half while your house was framed, the payment you budgeted is not the payment you get. Nobody guarantees the old rate, because nobody promised it.
• Jobs change. Leave a W-2 job for your own company mid-build and you may not have the tax return history a permanent loan requires.
• Credit changes. People furnish houses, and new debt at the wrong moment has killed conversions.
• Guidelines tighten, and the second appraisal is a second chance to come in low, now against the full permanent balance.

Fail that approval and you do not simply keep renting: you own a finished house with a matured construction loan that has to be paid off. Your choices are cash, a refinance on worse terms, or selling a home you just built to your own specifications.

The one-time close removes that exposure by structure, not by promise: there is no second application because there is no second loan. Programs still confirm nothing catastrophic changed, so do not quit your job, open new credit, or move money around mid-build. But you are not re-underwritten from scratch, and that is the whole argument.

General structural comparison. Terms vary by lender and are confirmed at application.

How Draws Work and What You Pay During the Build

On a purchase the whole loan funds at closing. On a construction loan only the lot payoff funds; the rest is released in stages, called draws.

Your builder completes a stage and submits a draw request against the approved cost breakdown. The lender inspects the site to verify the work is genuinely in place, and title runs a date-down search confirming no mechanic’s liens have been recorded since the last draw. Funds go to the builder, not to you, usually with a percentage held as retainage until completion. A typical build runs four to eight draws, foundation through final grade.

Your payment ramps as the house goes up

During construction you pay interest only on the balance actually drawn, not on the full approved amount. In month two, with a lot and a foundation funded, the payment is small; by month nine it approaches a full interest payment on the finished loan. Budget for the late months, and if you are also paying rent or a mortgage, ask whether your program allows construction interest to be financed in.

At conversion the interest-only period ends and you begin amortizing with taxes and insurance escrowed. Salt Lake County’s 2025 average total rate was 1.0504% on 55% of value after Utah’s 45% primary residential exemption: roughly $385 a month on an $800,000 finished home, which we build into the qualifying payment.

Locking a Rate That Has to Survive a Build

A purchase lock runs 30 to 45 days. A build runs nine to twelve months. How a program bridges that gap separates construction lenders.

Extended locks. One-time close programs either set the permanent rate at the initial closing or lock it under an extended program running from roughly 180 days to a full year. Long locks are not free, the lender carries rate risk for months and charges for it in rate or points. That is the price of certainty, and on a build it is usually worth paying.

Float-downs. The obvious objection to a year-long lock is what happens if rates fall. Many programs answer with a one-time float-down: if the market improves past a stated threshold before conversion, you re-lock once at the better rate. The rules are specific, a minimum improvement, an exercise window, one use, so get them in writing.

Running long. Builds run long. If the lock expires you re-lock at current market, or under a worst-case-pricing rule handing you the worse of your original rate and today’s. Extensions are priced per day or in blocks; one is cheap, a series is not. The construction period has its own maturity date too, and blowing through that is the bigger problem. Take the builder’s schedule, add a buffer, lock to the buffered date.

Qualifying to Build: You, the Builder, and the Project

A resale lender underwrites one thing, you. A construction lender underwrites three.

You and your builder

Your side is standard underwriting with a longer view: credit, income, assets and debt-to-income measured against the permanent payment rather than the interest-only construction payment, with higher reserve requirements than on a purchase.

The builder is approved before the loan is, which catches people who have already signed a contract. Approval generally means a current Utah contractor license in good standing, liability and workers’ compensation coverage, financial statements or bank references, and a record of comparable projects, a package an established Herriman-area builder will already have. A first-time builder, an out-of-state contractor, or an owner-builder arrangement is much harder, and true owner-builder financing is offered by very few lenders. Tell us who your builder is before you sign, not after.

The project

• A fixed-price or clearly structured contract with defined scope, price and completion timeline, plus evidence of the lot.
• Complete plans and specifications: drawings, elevations and a finish schedule, because the appraiser values the house from these.
• A line-item cost breakdown, which becomes the schedule of values governing every draw, and a contingency reserve, commonly a single-digit percentage of hard costs.
• Permits or a clear path to them, plus soils reports where the site calls for it, toward the west bench and the canyon, slope and drainage come up more than on flat ground.

Appraisal Subject to Completion on a Custom Plan

There is no house to appraise, so the appraisal is performed subject to completion per plans and specifications. The appraiser values a home that exists on paper, then returns after the build for a final inspection certifying it was completed as described. That inspection is a condition of conversion, and scheduling it late is a common reason conversion slips.

On a custom home the harder problem is comparables. A production subdivision gives the appraiser a dozen sales of the same plan; a one-off build against the benches may have very few, forcing wider adjustments that invite underwriter scrutiny. Unusual features do the same: an oversized shop, a steep-site walkout, finish levels the market does not support.

When value comes in below cost plus land

This is the specific failure mode of custom building: what a house costs to build is not what it is worth. You can spend $300,000 on a lot and $700,000 on construction and receive an appraisal at $920,000. The lender lends against appraised value, not your invoices, so the gap gets closed one of four ways: more cash, more land equity, a reconsideration of value, or less scope. A reconsideration works when comps were missed; it does not work as an appeal to your cost basis.

Land You Already Own as Your Down Payment

Many Herriman buyers already own the ground, and in most cases that is the down payment. A construction lender looks at total project cost, land value plus construction cost, and lends a percentage of the lesser of that total or the appraised value of the finished home. Own a $250,000 lot free and clear on a $700,000 build and that equity may cover the whole requirement without a check at closing.

• How long you have owned it. Lots held longer are credited at current appraised value; a recent purchase is often credited at your purchase price instead, so tell us when you bought.
• Existing liens. If a lot loan is outstanding, the construction loan pays it off and only net equity counts.
• Improvements you paid for: site work, utility stubs, a well or septic, grading, access. Keep the invoices.
• How you acquired it. Gifted or inherited land is fine, but the chain of title must document cleanly.

Lot and Land Loans When You Want the Ground First

Buildable ground on Herriman’s west and south edges moves, and buyers often want to secure a parcel now and start building in a year or two. That is a lot or land loan, a different product, because land is collateral a lender cannot foreclose and rent out:

• Larger down payment, commonly 20% to 35%, depending on lender and whether the lot is improved.
• Shorter amortization, often with a balloon, and a higher rate than an owner-occupied mortgage.
• Improved versus raw matters. A finished lot with utilities to the line prices very differently from raw acreage needing road, power, water and a septic feasibility study.
• Portfolio lending. Most lot loans are held by local banks and credit unions rather than sold to the agencies, so guidelines vary widely.

If you are building within a few months, folding the lot into a one-time close is cleaner and cheaper. If you need to hold ground while plans and permits come together, the lot loan is the right tool, and the construction loan pays it off.

Change Orders, Cost Overruns, and the Contingency Reserve

Every build has changes: a window you enlarge standing in the framed great room, or an excavation that hits rock.

Your loan amount is fixed at closing. It was approved for a figure based on the cost breakdown and does not grow when the project costs more. Increasing it means an amendment, and may be impossible if the increase pushes value or ratios past program limits. Overruns come out of contingency or your pocket.

That is what the contingency reserve is for. Lenders require it because a cost breakdown is an estimate. Treat it as insurance, not a shopping allowance, spend it on upgrades in month three and you have no cushion in month eight. Unused contingency generally reduces the loan at completion.

Change orders go through the lender, not around it, because appraisal, cost breakdown and draw schedule were all built on the original plans. A side agreement your lender never sees surfaces at the final inspection, when the appraiser certifies the house was built per plans and specs.

Who pays depends on the contract. A true fixed-price contract puts most cost risk on the builder. A cost-plus contract, or one riddled with allowances for flooring, cabinets and landscaping, puts it back on you, allowances are estimates, and the difference between the allowance and what you select is yours.

Carrying Your Current Mortgage While You Build

Most people building in Herriman already own somewhere in the valley, and unlike a resale move you cannot line the closings up. The underwriter sees two housing obligations for the whole build.

Qualify carrying both. Cleanest if income supports it. The underwriter counts your existing mortgage, taxes, insurance and HOA plus the new permanent payment: and your construction interest is climbing at the same time, so model the last three months of the build, not the first three.

Bridge or HELOC. A line drawn before you list can fund the lot and be repaid when the current home sells. The payment counts in your debt-to-income, and lenders generally will not open a new line on a property already listed. If the real goal is more house rather than a different address, a renovation loan is sometimes cheaper.

Salt Lake County Loan Limits at Herriman Build Costs

Herriman is in Salt Lake County, so the 2026 one-unit conforming limit is $832,750 and FHA is $637,100. Twenty-five of Utah’s twenty-nine counties sit at that conforming baseline; only Summit and Wasatch ($1,150,000), Wayne ($997,050) and Grand ($839,500) are above it.

These numbers behave differently on a build, because your loan is measured against land plus construction cost rather than a sale price. A lot and a house you think of as modestly priced can add up past the conforming line once site work, driveway, finished basement and shop are in the cost breakdown. Above $832,750 you are in jumbo territory, fewer construction lenders, larger down payments, tighter reserves, so plan for it at the design stage.

FHA construction-to-permanent exists, but $637,100 is a tight fit once land is included, and few lenders offer the FHA one-time close. VA offers a construction-to-permanent option for eligible veterans with no loan limit at full entitlement, though that lender field is likewise narrow. And on zero down: there is no USDA financing anywhere in Salt Lake County.

Utah Housing at Herriman Price Points

Utah Housing programs do work in Herriman, but for most buyers here the purchase price ceiling binds before the income cap. Salt Lake County FirstHome limits are $126,100 for a one-to-two-person household, $145,000 for three or more, with a maximum purchase price of $666,600.

Utah Housing Corporation limits as currently published. Verify at application, UHC updates these without advance notice.

Assistance is a 30-year fixed second mortgage in one of two shapes. The traditional option lends up to 6% of the first mortgage, capped at $27,500, at your first-mortgage rate plus one percent (8% ceiling), and it amortizes. The deferred option lends up to 3.5%, same cap, at 3.5% deferred simple interest with no monthly payment, due at sale, refinance or maturity.

HomeAgain, NoMI and Score are currently listed as suspended, so if you were quoted one of those, that information is out of date. Layering Utah Housing onto a construction loan is also not always possible, because UHC financing is a permanent mortgage product. The workable sequence is often a construction loan with a UHC first mortgage as the takeout, which reintroduces exactly the requalification risk above. See our Utah Housing page or start an application.

Herriman Neighborhoods We Serve

We finance homes and builds throughout Herriman and the southwest valley: Rosecrest, Herriman Towne Center, Anthem, Juniper Canyon, Providence Point, the Butterfield Canyon area, Blackridge, Copper Mountain, the Olympia area, and the Herriman edge of Daybreak.

Nearby Utah Markets

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Herriman Mortgage and Construction Loan FAQs

Axent Funding has brokered Utah mortgages since 2002. Our fees run about 25% below many competitors, with no processing or junk fees, and we close in three weeks on a clean file. NMLS 279397. Call 801-576-9336 or apply online.