Best construction loan lenders in 2022

Most people cannot afford to design and build their own home or pay for major improvements out of pocket, which is why many lenders offer construction loans – short-term loans used to finance the construction or rehabilitation of a house. Here’s Bankrate’s guide to the best construction lenders in 2022.


To determine the best construction loan lenders, Bankrate evaluated lenders based on several criteria, including affordability (annual percentage rate and fees); timeliness (approval and closing times); and experience (including customer service).

The best construction lenders

TD Bank

TD Bank Mortgage Review

Loan products Purchase and refinancing; construction loans, conventional, jumbo, FHA, VA, home equity line of credit (HELOC), home equity loan, doctor loan
Credit requirements Unavailable
  • Bank and lender approved by the Better Business Bureau (BBB)
  • Construction loan borrowers only pay closing costs for one mortgage loan
The inconvenients
  • Mortgages only available in 15 states and Washington, DC
Highlight TD Bank simplifies the lending process for construction loans by requiring only one application for construction financing and permanent financing (known as a construction to permanent loan).

American bank

US Bank Mortgage Review

Loan products Purchase and refinancing; construction and renovation loans, conventional, jumbo, FHA, VA, USDA, HELOC, home equity loan, interest only, one to four unit loans
Credit requirements 620 for conventional loans; 740 for jumbo loans
  • Competitive rates published daily on the website
  • Interactive lending portal
  • Government guaranteed loan products
  • Home equity options
The inconvenients
  • Borrowers seeking construction loans should speak directly to a loan officer
Highlight US Bank Mortgage and Personal Checking Package customers can receive a closing cost credit of up to $1,000.


Mortgage Truist Review

Loan products Purchase and refinancing; construction and renovation loans, conventional, jumbo, FHA, VA, USDA, HELOC, home equity loan
Credit requirements 620 for conventional loans
  • Online pre-approvals
  • Rates published online
  • Branches in 17 states and Washington, DC for in-person support
  • Accredited by the BBB with an A+ rating
The inconvenients
  • Loans not offered in Alaska, Arizona and Hawaii
  • Limited Information Regarding Online Homebuyer Eligibility
Highlight Truist customers get special incentives, though details aren’t disclosed up front; you will need to consult a loan officer for more information.

Flagstar Bank

Flagstar Bank Mortgage Review

Loan products Purchase and refinancing; construction and renovation loans, conventional, jumbo, FHA, VA, USDA, home equity loan
Credit requirements 620 for conventional loans; 700 for jumbo loans; 580 for FHA loans
  • Available in all 50 states
  • Online prequalification
  • Flexible loan options for construction and renovation
  • No assembly costs
  • A+BBB rating
The inconvenients
  • No HELOC
  • Loan fee scale difficult to access online
Highlight The bank’s One-Close construction loan offers a simplified drawdown schedule and a set of fees and closing costs.

Homebridge Financial Services

Homebridge Financial Services Mortgage Review

Loan products Purchase and refinancing; construction and renovation loans, conventional, jumbo, FHA, VA, USDA, HELOC, home equity loan, interest only, one to four unit loans
Credit requirements 640 for conventional loans; 680-700 for jumbo loans; 580 for FHA loans, VA loans, and USDA loans
  • Offers an assortment of flexible construction, renovation, purchase and refinance products, including single-closing construction loans
  • Simplified application process
  • User-friendly online portal to submit documents and monitor application status
The inconvenients
  • Loans not offered in Utah
  • Mortgage rates not published online
Highlight Homebridge has a team of dedicated staff to help you through the loan application process.

Construction loan requirements

Construction lenders have varying requirements, but they’re usually based on how much you’re borrowing. As with other types of mortgages, your lender determines your eligibility for a construction loan by assessing your creditworthiness, income, debt-to-income ratio (DTI), and other factors:

  • Credit score – Most lenders require a credit score of 680 or higher, but some may work with borrowers with lower credit scores.
  • DTI Report – Lenders generally seek that your debts do not total more than 45% of your monthly income.
  • Depositt – A down payment of between 20-30% is usually required, although some government loan programs may require less.
  • Construction plan – Lenders generally require a detailed plan before financing the first phase of the project.
  • Repayment plan – In addition to the construction loan itself, you must also qualify for permanent mortgage financing. The construction loan covers payments for the project during the construction process, then turns into a permanent mortgage upon completion.

Generally speaking, mortgage lenders tend to have tighter restrictions for construction loans because the asset (the house) does not yet exist.

Types of construction loans

  • Construction loan to permanent – A loan to pay for construction costs, which then turns into a permanent mortgage once the house is finished and ready for occupancy
  • Construction loan only – A loan to pay construction costs by disbursing funds in installments as project milestones are reached; usually has a repayment period of one year or less
  • Owner-builder construction loan – A loan that works like a construction-permanent or construction-only loan, but with one key difference: the borrower is also the builder
  • End of loan – The mortgage on the property once construction is complete

What are the interest rates for construction loans?

Construction loan interest rates are typically higher than mortgage rates for standard home purchases, in part because in a construction situation there is no home (yet) to secure the loan. construction, which makes the offer more risky for the lender.

Construction loan vs renovation loan

A construction loan is a short-term loan designed to help purchase land and build a home or pay for major renovations to an existing home.

A builder or borrower usually takes out a construction loan to cover the cost of building the house before getting a standard mortgage. The lender pays the builder in installments that follow each phase of construction. Prior to project completion, borrowers typically only pay interest and repay the loan after construction is complete.

Renovation loans, on the other hand, allow homeowners to access funds to pay for home renovations. This financing can take various forms, such as a personal loan or a government-insured loan, or by taking the equity in your home. Overall, renovation loans are not as structured as construction loans, and borrowers have more options when it comes to accessing funds.

How to Choose the Best Construction Lender

Construction loans can be complex, so it’s best to work with a lender who has experience with this type of mortgage. Procedures and policies differ from lender to lender, so look for one that can realistically work with your schedule and needs.

To find the best mortgage lender and get the cheapest loan, compare multiple construction loan lenders and their rates and terms, and also compare your interactions with them. If you are looking for responsiveness, for example, note this in your exchanges with the loan officer. Ultimately, the best lender for you depends on your goals, preferences, and financial situation.

How to Apply for a Construction Loan

To apply for a construction loan, you will need to provide the lender with your work history and financial information, including your income, assets, and debts, as well as your contract with the architect or builder and their plans for the project. These plans must specify the total estimated cost of the construction so that the amount of the loan can be established credibly. Once your application is submitted, be prepared to answer any questions your lender may have and provide any additional documentation as needed. This will help speed up the underwriting and approval process and keep things on track.

Summary: The Best Construction Lenders

With additional reporting by Allison Martin

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