6 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.
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.
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
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 New American Funding: NMLS#6606 Top 3 most visited 🏆 Learn moreat New American Fundingat New American Funding | 4.0 /5 | 580 | 3% | Top 3 most visited 🏆 Learn moreat New American Fundingat New American Funding |
5.0 /5Easy custom rates Good for Jumbo loans | 620 | 3% | ||
4.0 /5 | 620 | 5% | ||
4.0 /5 | 620 | 3% | ||
3.0 /5 | 620 | 3% |
- 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.
- Mortgage origination fees tend to be on the high end.
- Personalized mortgage rates are not available on the website without providing contact information.
- 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.
- 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.
- 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.
- 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.
- 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.
- Sample rates for some loan products are available only by contacting a loan officer.
- Physical locations aren't available in all states.
Movement Mortgage: NMLS#39179
620
3%
National
- 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.
- 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.
- 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.
- 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.
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 November 2, 2023
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.
NerdWallet's Best Construction Mortgage Lenders
- 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
