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Construction loans help fund the construction of your home, from purchasing land and lots to permits, labor and materials. This type of loan is not as simple as a regular mortgage for an existing home, but many types of lenders offer it, including large banks. Here are the best construction loan lenders recommendations for 2025:
Best Construction Loan Lenders
| Lender | availability | Bankrate score |
|---|---|---|
| *Banks or lenders offer construction loans only in these states. Other states may offer other types of mortgages. | ||
| PNC Bank | Alabama, Arizona, California, Colorado, Florida, New Mexico, Texas, Washington* | 4.8 |
| US Bank | All US states | 4.8 |
| Wells Fargo | All US states | 4.8 |
| New American Funding | All US states | 4.6 |
| First Citizens Bank | All US states except Delaware, Idaho, Indiana, Kentucky, Maine, New Hampshire, North Dakota, Rhode Island, South Dakota, Washington, West Virginia and Wyoming | 4.5 |
| Old National Bank | All US states | 4.5 |
| TD Bank | Connecticut, Delaware, Florida, Maine, Maryland, Maine, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia, Washington DC | 4.5 |
How to apply for a construction loan
Applications for a construction loan are similar to applying for a mortgage on an existing home, with some extra steps and perhaps a longer timeline. This is the basic procedure:
1. Check construction loan requirements
To qualify for a construction loan, you must meet the lender’s requirements. These include:
- Credit score – Many lenders require a credit score of 680 or higher for construction loans, but some may work with borrowers with lower credit scores.
- Debt to Income (DTI) Latio – Lenders usually seek your debt obligations and look for less than 45% of your monthly income in total.
- down payment – Prepare to defeat 20% or more unless you apply for a construction loan for your FHA or VA.
- Construction plan – Lenders usually require detailed planning before funding the first phase of the project.
- Repayment plan – In addition to the construction loan itself, you will also need to qualify for permanent mortgage financing. Most construction loans are converted to permanent mortgages upon completion of the home.
2. I buy the price with the lender
Many mortgage lenders don’t offer construction loans, so you may need to expand your search to reveal your options. Banks tend to offer them more than credit unions and online lenders, so it may make sense to start there. Some banks offer special pricing for customers with individual or business accounts.
3. Submit the documents
Once you have connected with the lender and determined your eligibility, submit a contractor agreement and plan from the architect or builder in addition to your loan application. Lenders want to know not only the cost of the build, but also the scope of the work and timeline.
Your lender has cited your application so be prepared to answer your questions and provide additional documentation if necessary. This helps avoid deadlines and delays in getting funding to the contractor.
Types of construction loans
- Inter-construction loan: Loans for construction costs. Once your home is finished and ready for occupancy, convert it into a permanent mortgage
- Construction only loan: A loan to pay for construction costs by incrementing funds once the project’s milestones are met. Usually, the repayment period is within one year
- Owner Construction Loan: A loan that works like a permanent or construction-only loan from construction, but there is one important difference. The borrower is also a builder
- Termination loan: Once construction is complete, real estate mortgage
