Best 2022 construction lenders

Construction loans are short-term loans used to finance the building or renovation of a home. Most people cannot afford to design and build their own home or pay for major modifications out of pocket. Here are Bankrate’s top construction loan lenders for 2022.


Bankrate rated lenders based on affordability (annual percentage rate and fees), expediency (approval and closing timelines), and experience (including customer service support). Try to find out oakparkfincial lending for bad credit.

Best construction loan lenders

TD Bank

  • Loan products- Purchase and refinancing loans; construction loans; FHA, VA, home equity line of credit; physician loans
  • Credit Requirement- Unavailable
  • Pros- BBB-accredited bank and lender. Construction loan applicants only pay one closing cost.
  • Cons- Only 15 states and DC offer mortgages.
  • Highlights- TD Bank simplifies the construction loan procedure by requiring only one application for construction and permanent finance (known as a construction-to-permanent loan).

U.S. Bank

  • Loan Products: Purchase and refinance; construction and remodeling loans; HELOC (home equity line of credit) and interest-only loans for one to four units.
  • Credit Requirement- 620 for standard loans; 740 for jumbo loans
  • Pros- Daily updated pricing on the website. Online lending gateway gov-backed loans Equity options
  • Cons- Construction loan applicants must contact a loan officer directly.
  • Highlights- US Bank mortgage and Personal Checking Package customers can get a $1,000 closing cost credit.


  • Loan products- Purchase and refinancing loans, construction and remodeling loans, FHA, VA, USDA, HELOC, home equity loan
  • Credit Requirement- 620 credit score for conventional loans
  • Pros- Preapprovals online. Online rates. 17 state branches in D.C. for in-person support. BBB A+ rating
  • Cons- No loans in Alaska, Arizona, or Hawaii. Online homebuyer eligibility information is scarce.
  • Highlights- Incentives for Trust customers are not revealed upfront; you must speak with a loan officer for more details.

Needs for a construction

Construction loan lenders’ requirements vary, but are usually depending on the amount borrowed. Like other mortgages, your lender calculates your construction loan eligibility based on your credit, income, and debt-to-income ratio (DTI).

Credit score — Most lenders want a 680 or better credit score, however, some may deal with lesser numbers.

DTI ratio – Lenders often require debt commitments to not exceed 45 percent of monthly income.

Downpayment- A 20%-30% down payment is normally required, though some government lending schemes may require less.

Construction plan – Before funding the initial phase of a project, lenders normally want a detailed strategy.

Repayment Plan- You must also qualify for permanent mortgage financing in addition to the construction loan. The construction loan covers the project payments during construction and transitions to a permanent mortgage at completion.

Because the asset (the home) hasn’t been built yet, mortgage lenders tend to be more restrictive.

Construction loan types

Construction-to-permanent loan- When the home is finished and ready for occupation, the construction-to-permanent loan transforms into a permanent mortgage.

Construction-only loan- Paying for building costs by disbursing funds as project milestones are fulfilled; repayment duration is usually one year or less.

Owner-builder construction loan- only loan with one major difference: the borrower is also the constructor.

End loan – Mortgage on the property after building

What is the construction loan rate?

Due to the lack of a dwelling to pledge the loan against, lenders are more reluctant to offer construction loans.

Loan for building vs. renovation

A construction loan is a short-term loan used to purchase land and build a home, or to renovate an existing home.

Most homebuyers take out construction loans to cover the costs of the building before getting a normal mortgage. The lender pays the builder in stages. Borrowers often pay only interest until the project is completed, then repay the loan.

Renovation loans, on the other hand, provide financing for house upgrades. This cash can be obtained through a personal loan, a government-insured loan, or by tapping into your home’s equity. Overall, rehabilitation loans are less structured than construction loans, and borrowers have more options.

Best Construction Loan Lenders

Construction loans can be complicated, so it’s better to work with a lender who specializes in them. Lender procedures and rules vary, so find one that can accommodate your timeframe and needs.

Compare different construction loan lenders’ rates and terms, as well as your interactions with them, to find the best mortgage lender and lowest-cost loan. If you want attentiveness, for example, let the loan officer know. It all comes down to your goals, interests, and financial condition.

Get a construction loan today!

An architect or builder’s contract and their project blueprints are required to apply for a construction loan. These plans should include the overall projected cost of construction to establish the loan amount. After submitting your application, be ready to answer any inquiries from your lender and supply any further evidence. This will assist speed up the underwriting and approval process.

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