7 Best Construction Loan Lenders of July 2024

Kate Wood
Written by
Last updated on June 26, 2024
Edited by
✅ Fact checked and reviewed
Jeanette Margle
Edited by
✅ Fact checked and reviewed

Some or all of the mortgage lenders featured on our site are advertising partners of NerdWallet, but this does not influence our evaluations, lender star ratings or the order in which lenders are listed on the page. Our opinions are our own. Here is a list of our partners and here's how we make money.

  • 50+ mortgage lenders reviewed and rated by our team of experts.
  • 40+ years of combined experience covering mortgages and financial topics.
  • Objective, comprehensive star rating system assessing 120+ categories and 5,000+ data points.
  • Governed by NerdWallet's strict guidelines for editorial integrity.
NerdWallet's mortgage content, including articles, reviews and recommendations, is produced by a team of writers and editors who specialize in home lending. Their work has appeared in The Associated Press, USA Today, The Washington Post, MarketWatch, Newsweek and many other national, regional and local publications. They have been cited in publications including The Wall Street Journal, and appeared on NerdWallet's "Smart Money" podcast as well as local TV and radio.

7 Best Construction Loan Lenders of July 2024

Have you or your spouse served in the military?

We’ve got more home loan options for you. Show me

Lender
NerdWallet Rating
Min. credit score
Min. down payment
Learn more
New American Funding

New American Funding: NMLS#6606

LEARN MORE
on NerdWallet
Home loans overall
Best for customer satisfaction

580

3%

LEARN MORE
on NerdWallet
Flagstar

Flagstar: NMLS#417490

LEARN MORE
on NerdWallet
5.0
/5
Home loans overall
Best for rate transparency

620

3%

LEARN MORE
on NerdWallet
US Bank

US Bank: NMLS#402761

LEARN MORE
on NerdWallet
4.0
/5
Home loans overall
Best for jumbo lending

620

5%

LEARN MORE
on NerdWallet
Wintrust Mortgage

Wintrust Mortgage: NMLS#449042

LEARN MORE
on NerdWallet
4.0
/5
Home loans overall
Best for first-time home buyers

620

3%

LEARN MORE
on NerdWallet
Movement Mortgage

Movement Mortgage: NMLS#39179

LEARN MORE
on NerdWallet
3.0
/5
Home loans overall
Best for variety of loan types

620

3%

LEARN MORE
on NerdWallet
New American Funding
LEARN MORE
on NerdWallet
New American Funding

New American Funding: NMLS#6606

4.0
Home loans overall
NerdWallet rating
Min. credit score

580

Min. down payment

3%

Why We Like ItGood for: first-time home buyers, military members and self-employed or underrepresented borrowers.
Pros
  • Offers a wide variety of purchase and refinance mortgages with an emphasis on helping underserved communities.
  • Its home equity line of credit can be used for an owner-occupied or second home.
  • Has a program to enable buyers to make cash offers.
  • Receives high marks for customer satisfaction, according to J.D. Power and Zillow.
Cons
  • Mortgage origination fees tend to be on the high end.
  • Personalized mortgage rates are not available on the website without providing contact information.
Read Full Review
Flagstar
LEARN MORE
on NerdWallet
Flagstar

Flagstar: NMLS#417490

5.0
Home loans overall
NerdWallet rating
Min. credit score

620

Min. down payment

3%

Why We Like ItGood for: Borrowers who may benefit from Flagstar’s unique loan options, such as ITIN loans, loans for manufactured homes or physician loans.
Pros
  • Multiple loans for those who are renovating or building a home, including loans with interest-only payments during construction.
  • Offers home equity loans and lines of credit.
  • Offers down payment assistance and loans for underserved borrowers, including ITIN loans and loans with flexible qualifications in certain communities.
  • Interest rates are on the low side relative to other lenders, according to the latest federal data.
  • Borrowers can enter their information (including their desired loan amount, down payment and zip code) into the lender’s Mortgage Quote Comparison tool and receive a customized rate quote.
Cons
  • Home equity loans are not available in all locations served by Flagstar.
  • In 2022, the lender was fined for violating laws regarding properties in flood zones.
US Bank
LEARN MORE
on NerdWallet
US Bank

US Bank: NMLS#402761

4.0
Home loans overall
NerdWallet rating
Min. credit score

620

Min. down payment

5%

Why We Like ItGood for: borrowers who are financing home improvement projects.
Pros
  • Offers a range of loan types, including FHA loans, VA loans and home equity options.
  • Lists sample mortgage rates and APRs for many of its products online, including a breakdown of estimated monthly payments.
  • Their mobile app is highly rated in the App Store.
Cons
  • Sample mortgage rates are not customizable, and many estimated conventional and jumbo rates assume a down payment of at least 25%.
  • We were unable to contact a representative by phone.
  • Lender site does not have a live chat feature.
Wintrust Mortgage
LEARN MORE
on NerdWallet
Wintrust Mortgage

Wintrust Mortgage: NMLS#449042

4.0
Home loans overall
NerdWallet rating
Min. credit score

620

Min. down payment

3%

Why We Like ItWintrust 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 a broad variety of government-backed mortgages and other loans.
  • Participates in first-time home buyer assistance programs in Illinois 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.
Movement Mortgage
LEARN MORE
on NerdWallet
Movement Mortgage

Movement Mortgage: NMLS#39179

3.0
Home loans overall
NerdWallet rating
Min. credit score

620

Min. down payment

3%

National / regional

National

Why We Like ItGood for: borrowers seeking government-backed mortgages or loans for condos, home renovation or construction, especially if speed is an important factor.
Pros
  • Loans can be processed in as little as seven days, the lender says.
  • Offers renovation loans and home equity lines of credit.
  • Movement Boost program can help FHA borrowers with down payment and closing costs.
Cons
  • Borrowers cannot browse sample mortgage rates online.
  • Mortgage rates and fees are on the high side, according to the latest federal data.
  • Recent government regulatory action could affect consumer confidence.
PrimeLending
LEARN MORE
on NerdWallet
PrimeLending

PrimeLending: NMLS#13649

3.0
Home loans overall
NerdWallet rating
Min. credit score

620

Min. down payment

3%

Why We Like ItGood for: those seeking to buy a fixer-upper, build a new home or make renovations.
Pros
  • Offers a broad selection of renovation loans to finance cosmetic upgrades or structural repairs.
  • Issues loan approval letters within 24 hours to borrowers who qualify.
  • Offers resources to connect eligible borrowers with closing cost and down payment assistance programs.
Cons
  • No online mortgage rates — you have to contact the lender for information.
  • Rates and fees are on the high side, according to the latest federal data.
  • Doesn't offer home equity loans or lines of credit.
Alliant
LEARN MORE
on NerdWallet
Alliant

Alliant: NMLS#197185

4.5
Home loans overall
NerdWallet rating
Min. credit score

N/A

Min. down payment

3%

Why We Like ItGood for: eligible borrowers who are open to joining a credit union and want a mortgage from an online lender.
Pros
  • Borrowers can apply entirely online. The lender is also very transparent about what borrowers can expect from the process, including nontraditional customers.
  • Borrowers do not need to become members of the credit union until they’ve reached the closing process, meaning that interested home buyers can apply and get rate offers without committing to membership.
  • Offers customized rate quotes, including a detailed breakdown of estimated closing costs.
Cons
  • Doesn’t offer renovation loans.
  • Joining the credit union adds a step to the application process.

What type of loan is best for building a house?

While a traditional mortgage finances buying an existing home, a construction loan provides money for building a house. Construction loans tend to 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.

» MORE: How much does it cost to build a house?

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. During the construction phase, you may be able to make interest-only payments, keeping your costs lower while you're still living elsewhere. Since this type of loan combines a construction loan with a traditional mortgage, you only need to shop for a loan and pay closing costs once. 

  • 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. These loans tend to be pricier overall because with two closings, you'll pay many of the closing costs and fees twice. 

  • 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 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. You're going to need solid finances and possibly a hefty down payment.

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 shopping different construction loans to make sure that you couldn't get a better deal elsewhere. Sometimes, developers will offer incentives that are only available if you work with their preferred lender. But if you'd get a significantly better interest rate from a different mortgage lender, you might decide to go your own way.

What is the lowest down payment for a construction loan?

Mortgage lenders often require down payments of 20% for construction loans. Depending on how much you're borrowing, the type of loan you're using and your finances, that amount could vary. That goes up as well as down — a lender could potentially ask for a down payment that's even higher than 20%.

What is a good credit score for a construction loan?

The credit score required for a construction loan will vary depending on the type of loan you're trying to get. Some lenders may require a credit score of at least 700. If you're using a government-backed loan, like an FHA 203(k) loan, the credit score requirement should be lower.

But it's important to remember that even though government agencies issue overall minimum credit scores for their loans, lenders can set their own standards. For example, even though the Federal Housing Administration says you could get an FHA 203(k) loan with a credit score of at least 500, a lender may ask for a higher score.

How to apply for a construction loan

Getting a construction loan has a few additional steps that aren't part of getting a mortgage. Here's a quick overview of what to expect.

1. Find a builder

In order to get a construction loan, you're going to need to work with a reputable builder. When you're applying for the loan, the lender will check the builder's licensing, credit, references and more. You'll also need the builder to provide construction information like blueprints, an overall budget and a construction schedule.

If you intend to be your own contractor and build the home yourself, you may need a slightly different type of construction loan known as an owner-builder loan or a self-build loan. These aren't for the average DIYer: Lenders will seek substantive proof that you're up to the task, including licensing and experience.

2. Compare construction loan lenders

Shop for a construction loan lender that will suit your needs. Check out potential lenders that offer the type of loan you're seeking, competitive interest rates and terms that work for your schedule and finances.

You'll want to apply for preapproval with lenders that interest you, to see how much you may be able to borrow and what interest rate you may be offered. Bear in mind that in addition to the usual documentation (such as pay statements and tax returns), you'll also likely need to provide information like building plans and references for your builder.

3. Get homeowners insurance

Yes, you're going to need homeowners insurance even though the home isn't built yet. Lenders will generally require that builder's risk insurance is included in the policy, which covers the materials and structure during construction.

Once you've got these pieces in place and you feel confident about your choice of lender, you'll be ready to apply for a construction loan.

More from NerdWallet

Last updated on June 26, 2024

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 more than 50 mortgage lenders, including the majority of the largest U.S. mortgage lenders by annual loan volume (measured among lenders with 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 consumer-oriented information about construction loans on their websites, and achieve at least an overall 3-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 2022 HMDA data for origination volume, origination fee, average interest rate and share-of-product data.

To recap our selections...

NerdWallet's Best Construction Loan Lenders of July 2024

  • New American Funding: Best for customer satisfaction
  • Flagstar: Best for rate transparency
  • US Bank: Best for jumbo lending
  • Wintrust Mortgage: Best for first-time home buyers
  • Movement Mortgage: Best for variety of loan types
  • PrimeLending: Best for custom homes
  • Alliant: Best for credit union lending
NerdWallet Pixel