BEST OF

4 Best Construction Mortgage Lenders

Not every mortgage provider offers construction loans. We've chosen home construction lenders that rank among the best in several categories.

Sep 29, 2022

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Building a house or buying a house that's under construction — rather than purchasing an existing home — provides an opportunity for some personalization. But it comes with a challenge. You'll need to think about financing the building phase as well as the completed home.

If you are buying an unbuilt home that's in a development, there's a good chance you'll be offered financing by the developer. That doesn't mean you can't compare your options to see if you could get a more favorable interest rate or better terms. And if you're building a home outside of a development, finding an experienced and accommodating home construction lender is essential. NerdWallet has chosen these construction mortgage lenders as standouts.

Best Construction Mortgage Lenders

NASB
Learn more

at NASB

NASB: NMLS#400039

5.0

NerdWallet rating 
NASB

Min. credit score

620

Min. down payment

3%
Learn more

at NASB


Why we like it

NASB couples competitive mortgage rates and reasonable fees with a good assortment of loan options.

Pros

  • Offers competitive rates and origination fees.

  • Considers nontraditional income sources, in some cases.

Cons

  • Does not offer home improvement mortgages.

  • Doesn't offer home equity loans and lines of credit.

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Flagstar: NMLS#417490

5.0

NerdWallet rating 
Flagstar

Min. credit score

620

Min. down payment

3%

Why we like it

Good for: borrowers who want a wide range of choices — not only among mortgage products, but also in the channel they prefer, whether a branch, online or on the phone.

Pros

  • Offers a wide range of loan types and products, including FHA, VA and USDA.

  • Has a full suite of online conveniences.

  • Offers customized online rate quotes with monthly payment estimates, including mortgage insurance, when applicable.

Cons

  • Home equity loans are geographically limited.

Read Full Review

US Bank: NMLS#402761

4.5

NerdWallet rating 
US Bank

Min. credit score

620

Min. down payment

5%

Why we like it

U.S. Bank gets high marks for its loan offerings and online customer conveniences — and has competitive fees and mortgage rates.

Pros

  • Offers a full line of conventional and government loan products.

  • Provides home equity loans and lines of credit.

  • Allows borrowers to apply and track their loan's progress online.

Cons

  • No personalized mortgage rates available online.

  • Published mortgage rates assume an above-average credit score.

Read Full Review

Wintrust Mortgage: NMLS#449042

4.5

NerdWallet rating 
Wintrust Mortgage

Min. credit score

620

Min. down payment

3%

Why we like it

Wintrust Mortgage offers a variety of loan products, including home equity lines of credit and even home-improvement loans, and provides a number of online conveniences, such as loan process updates. But you won’t find rates posted online.

Pros

  • Offers specialty loans, such as construction and renovation loans and loans for second homes and investment properties.

  • Participates in first-time home buyer assistance programs in Illinois, Indiana and Wisconsin.

Cons

  • Sample rates for some loan products are available only by contacting a loan officer.

  • Physical locations aren't available in all states.

Read Full Review

What type of loan is best for building a house?

While a traditional mortgage finances buying a house, a construction loan provides money for building a house. Construction loans have shorter terms and higher interest rates than traditional mortgages. The lender pays the loan proceeds in installments to the contractor as building progresses. Once the home is completed, the construction loan is paid in full or converted to a permanent mortgage.

Types of construction loans

There are a few types of home construction loans:

  • A construction-to-permanent loan, also known as a "single-close" construction loan, becomes a permanent mortgage when the home is complete.

  • A construction-only loan, also known as a "two-close" loan, is paid off when building is finished. Unless you have ample cash to pay off the loan, you'll need to shop for a traditional mortgage during the building process.

  • Renovation construction loans include the cost of major renovations in the mortgage. The total loan amount is based on the value the home will have once the construction work is done.

Is a construction loan harder to get than a traditional mortgage?

Getting approved for a construction loan is generally more difficult than getting approved for a traditional purchase mortgage because there isn't a completed house to secure the loan during the building phase. A typical down payment is 20%, although a lower down payment may be allowed with some programs. Credit score requirements vary by type of loan and lender. A credit score of 720 or above is typically sufficient.

If you are buying a home that's being built by a developer, rather than a builder you've hired on your own, the developer will likely offer you either direct financing or a loan through a lender they've partnered with. While working with the developer's preferred lender may make parts of the process easier, it's worth comparison shopping different construction loans to make sure that you aren't trading considerable cash for a bit of convenience.

More from NerdWallet

Last updated on September 29, 2022

Methodology

The star ratings on this page reflect each lender's overall star ratings. Read more about how we determine those ratings.

The lenders on this page are chosen using this methodology:

NerdWallet reviewed nearly 60 mortgage lenders, including the majority of the largest U.S. mortgage lenders by annual loan volume (lenders had to have at least a 1% market share), lenders with significant online search volume, and those that specialize in serving various audiences across the country.

For inclusion in this roundup, lenders must originate construction loans to build a house, offer information about construction loans on their websites, and achieve at least an overall 4.5-star rating from NerdWallet.

NerdWallet solicits information from reviewed lenders on a recurring basis throughout the year. All lender-provided information is verified through lender websites and interviews. We also used 2020 HMDA data for origination volume, origination fee, rate spread and share-of-product data.

To recap our selections...

NerdWallet's Best Construction Mortgage Lenders