10 Best Construction Loan Lenders of September 2026
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Last updated May 15, 2026
Building a home or buying one under construction? You’ll need financing for both the build and the finished property. A lender experienced in construction loans can simplify the process. Here’s NerdWallet’s list of the best mortgage lenders that offer construction loans.
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What type of loan is best for building a house?
A construction loan provides money for building a house. These loans tend to have shorter terms and higher interest rates than traditional mortgages.
With a construction loan, instead of releasing all the money at once, the lender pays the builder or contractor in installments as the home is built. When the home is finished, the construction loan is either paid off or turned into a permanent mortgage.
New American Funding offers a large menu of loan products, as well as programs like first-time home buyer assistance, but personalized mortgage rates aren't available on its website.
What we like
Offers a wide variety of purchase and refinance mortgages, as well as unique buyer assistance programs.
Its home equity line of credit can be used for a primary residence or second home.
What we don't like
Average rates and fees are on the high side, according to the latest federal data.
Personalized mortgage rates are not available on the website without providing contact information.
If you want a wide range of loan options from a traditional bank, Truist is worth a look. Its streamlined application process and access to human support can make borrowing easier.
What we like
Offers a wide range of mortgage options focused on affordability.
Convenient online application.
Generous grants for qualifying home buyers in select locations.
What we don't like
Getting custom rates and applying for mortgage preapproval both require human contact.
Customer care leans heavily on phone and in-person service.
HELOCs are not available in most states, though home loans are available everywhere in the U.S. except Alaska, Arizona and Hawaii.
Flagstar Bank stands out for having a wide variety of home loan options, including harder-to-find products. But take note that Flagstar has reduced its mortgage business as part of corporate restructuring. Executives have indicated that the lender will rebuild its home lending operations by focusing on the needs of banking clients.
What we like
Offers down payment assistance programs to borrowers in qualifying areas.
Reported average time to close is 25 days, faster than the national average.
Conventional loan terms extend to 40 years, which is unusually flexible.
What we don't like
You can't apply for preapproval or prequalification online.
U.S. Bank offers a broad selection of mortgages, including some niche options. Rates and fees are middle of the road, per federal data. The bank offers helpful tech for rate shopping and live chat, though its online application could be smoother.
What we like
Wide variety of mortgages, including some harder-to-find types.
Experience in construction and renovation loans.
Offers up to $17,500 in assistance (income/location requirements apply).
What we don't like
Rates shown online don’t reflect your credit score.
Contact form interrupts online application before you can complete it.
Few mortgage options for borrowers with low/bad credit.
Guild Mortgage offers a wide range of products that may attract nontraditional borrowers, including loans with 0% or 1% down. However, interest rates aren’t published online, making it harder to shop around.
What we like
Offers a wide range of loans, including harder-to-find products that appeal to nontraditional borrowers.
Rate boasts a streamlined application process, with full underwriting in as little as one business day — though for all its online conveniences, you'll still work with a human.
What we like
Fully underwritten mortgage approval in as little as one day for qualified borrowers.
Generous selection of loans, including government-backed, interest-only, jumbo and renovation.
Advertises a fixed-rate HELOC that can be funded in as few as five business days.
What we don't like
Some affordable loan options have income limits or other restrictions.
HELOC requires immediate, full withdrawal of funds, though there is an option to make additional draws.
PrimeLending stands out for its harder-to-find mortgages, including renovation loans and options for self-employed borrowers, though online rate shopping isn't available. Most likely to appeal to buyers who need help with closing costs or want to finance a fixer-upper.
What we like
Offers closing cost assistance to some borrowers.
Wide variety of loan types, including non-QM loans.
Mortgages are available for manufactured homes, including 3D-printed houses.
Alliant Credit Union allows you to see a wide range of customized mortgage rates without sharing your contact information, and offers competitive loan products for first-time home buyers.
What we like
Offers a competitive combination of low rates and fees.
Mortgage borrowers do not need to become members of the credit union until reaching the closing process.
Sample rates are displayed upfront, and it's easy to get detailed, personalized rates without providing any personally identifying information.
In addition to conventional and government-backed loans, Northpointe Bank’s mortgage portfolio includes rarer offerings like doctor loans, condo loans and investment property loans. However, average fees and rates tend to be comparatively high.
What we like
Offers mortgages for investment properties.
Reported average closing time is faster than many competitors.
What we don't like
The lender's combination of rates and fees are on the high side, according to the latest data.
Bank’s mobile app isn’t useful for mortgage borrowers.
Our team of mortgage experts follows an objective, consumer-first methodology to assess home loan lenders and pick the best lenders for construction loans.
40+
Lenders reviewed
We review more than 40 lenders, including major banks, credit unions, and online lenders operating across multiple states.
11
Categories assessed
Each lender is evaluated across 11 weighted categories covering rates and fees, types of home loans offered, rate transparency and customer experience.
11,000+11k+
Data points analyzed
Our team tracks and reassesses thousands of data points annually for reviewed lenders, ensuring up-to-date, accurate comparisons across multiple loan types.
NerdWallet rates mortgage lenders based on what matters most to borrowers: rates and fees, product accessibility, customer experience, rate transparency and the range of loan options.
We review more than 40 lenders and score them using a weighted system that prioritizes affordability and a smooth borrowing experience. Lenders earn higher scores for offering lower borrowing costs, making loans widely available, clearly displaying rate information and supporting borrowers from application through closing.
We use a mix of lender-provided information, publicly available data and our own research and analysis to evaluate each lender. Recent regulatory actions may affect a lender’s score.
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 4-star rating from NerdWallet.
Types of construction loans
There are a few types of home construction loans. Which type will work best for you depends on your needs. Bear in mind that just because a lender offers construction loans does not necessarily mean they offer all types — you'll need to zero in on lenders that have the kind of loan you want.
Loan type
Best for
How it works
Construction-to-permanent loan
Most homebuyers looking for a construction loan
Pays for construction, then automatically converts to a standard mortgage when building's done.
One loan means only paying closing costs once.
Construction-only loan
Buyers who plan to shop for a mortgage later or who have funds to pay the balance on the completed home
Covers only the building phase.
After construction, you have to pay off the loan or take out a traditional mortgage.
Starting a new mortgage means another round of underwriting and closing costs.
Renovation loan
Buyers or homeowners upgrading an existing home
Combines funding for major renovations with a purchase or refinance loan.
Not exactly a construction loan, since these are used for improving existing properties rather than new builds.
Owner-builder loan
Experienced builders acting as their own contractor
Designed for borrowers who plan to manage construction themselves.
Lenders generally require credentials and proof of building experience.
Government-backed construction loans
Buyers looking for more flexible qualifications
Construction loans backed by the VA, FHA and USDA are available.
Often allow for lower down payments and credit scores.
Can be hard to find lenders offering these loans.
» MORE: Learn about renovation loan options for conventional and FHA loan borrowers
Is a construction loan harder to get than a mortgage?
Yes. Think about it from the lender's perspective: It's a bit more risky than a regular home purchase since there's no finished house as collateral for the loan. One way to think about construction loans is that the lender is underwriting both you and your project.
Lender requirements for construction loans tend to vary more than with regular purchase mortgages. Here's a list of typical requirements for construction loans, and how they compare to a conventional purchase loan.
Requirement
Construction loan
Conventional loan
Credit score
620-680, some lenders require 700+
As low as 620
Down payment
3-20%
As low as 3%, generally no higher than 5%
Debt-to-income ratio
45% or less
45% or less
Cash reserves
0-12 months' of housing payments
0-6 months' of housing payments
Loan term
6-18 months for the duration of construction
Up to 30 years
Note that those are just the requirements for the borrower. A construction loan lender will also evaluate your builder's credentials and the project plans.
How construction loans work, step by step
Building a home with a construction loan is different from buying an existing house with a traditional mortgage. Instead of receiving the full loan amount at closing, you typically get funds in stages as construction progresses. There's also a lot you'll do before even approaching lenders. Here’s how the process usually works.
Preparation steps
1. Secure your building site
It may feel obvious, but yes, step one is figuring out where the home will be built. You may already own the land, be buying it as part of the construction loan or be starting from scratch. If you still need to purchase a lot, some lenders will roll the cost of a lot loan into a construction loan; others may offer lot loans separately.
2. Choose a licensed builder
This is a massive step we're summarizing super fast. To get a construction loan, you'll need to work with a reputable builder and have legit construction plans. As part of your loan application, the lender will check the builder's license, finances and more. You or the builder will also need to provide construction information like blueprints, a budget and a construction schedule.
3. Obtain homeowners insurance
Even though your home isn't built yet, you'll need homeowners insurance. Most lenders require a policy with builder's risk insurance, which covers the materials and structure during construction.
Once you've got these pieces in place, you're ready to start looking at construction loan lenders.
Getting a construction loan
4. Compare construction loan lenders
Look for a lender that offers the type of loan you need, competitive interest rates and terms that fit your budget and timeline. (This list is a great place to get started!)
Applying for preapproval with different lenders can help you see how much you could qualify to borrow and what interest rate you might get. Again, in addition to the usual paperwork — like pay stubs and tax returns — even at this stage you may need to provide information like building plans and your builder's references.
What the nerds think
It pays to shop around
If you're working with a developer or a larger builder, they may offer you financing or a loan through a lender they work with. Using their lender could make the process easier, plus the developer might offer you incentives. But it's still a good idea to compare different construction loan lenders — how do you know you're getting a deal if you're only looking at one set of numbers?
The application process is more involved than a standard mortgage application because, as we've already noted, the lender is evaluating both you and the construction project.
You’ll need to provide the usual mortgage documents, like pay stubs, tax returns and bank statements. The lender will also review your credit score, income, debts, down payment and cash reserves.
The less-usual documents include building plans, cost estimates and paperwork from your builder.
6. Get an appraisal
This is another "but the home doesn't exist yet" step. With a new build, the appraisal is based on the as-completed value. An appraiser will review your land and building plans, then find recent comparable sales for your finished home. Their appraisal will be an estimate of the future value of your completed property.
Same as with any mortgage, the appraisal helps the lender decide how much it is willing to lend. If the appraisal comes in low, you could need to increase your down payment, revise your building plans or figure out additional financing.
Once you've made it through underwriting and the loan closes, construction can begin.
During construction
7. Lender releases funds
Construction loans are usually paid out through draws, which are scheduled payments. These are usually tied to project milestones. For example, the builder might receive funds after completing the foundation or roughing in utilities.
This funding might never touch your bank account; depending on the lender and the loan type, the money may be disbursed directly to the builder or contractor.
Before each draw, the lender may require an inspection to confirm that the work has been completed. This helps the lender ensure the funds are being used as intended and the project is staying on track.
8. Borrower makes payments
During construction, borrowers can often make interest-only payments, covering just the interest on the loan balance. The loan balance is usually based only on the amount of money that has been drawn, not the total loan amount.
For example, if you have a $500,000 construction loan and so far $200,000 has been paid out, your interest payment would be based on the $200,000 balance. This can get tricky, because your monthly payment amount will rise as more of the loan is disbursed — though interest-only payments will always be lower than repaying principal and interest.
As a final step, your lender may ask for proof that the home has been completed, like a certificate of occupancy.
Build or buy? What to consider
Building your own home can sound like a simple solution, particularly if you've been having trouble finding existing homes that suit your needs. But it's important to recognize that the process is complex and there are risks involved. Understanding the potential downsides can help you decide whether building over buying is right for you.
Higher interest rates and loan costs
Construction loans often come with higher interest rates than standard mortgages to reflect the lender's added risk (after all, you're borrowing money for a home that doesn't exist yet). Construction loans can also come with inspection fees, draw fees and other administrative costs that can add to your bill. And if you have a two-close loan, you'll pay closing costs twice.
More complicated approval process
As we've detailed above, qualifying for a construction loan is typically harder than getting a traditional mortgage. Lenders evaluate not only your finances, but also the details of the construction project and the builder. It's a lot to pull together, and delays on your end (gathering the paperwork) or the lender's (approving it all) can slow down the process.
Uncertainty
There are a lot more what-ifs with a construction loan, since so much can happen during the construction process. Some you can plan for, for example by keeping cash reserves set aside and really vetting your contractors. Others, however, are out of your control.
Cost overruns: If construction costs end up higher than expected, you’re usually left footing the bill for the difference. Costs can change due to rising material prices, difficulty finding labor or design changes.
Delays: Weather, permitting issues, supply chain snags and contractor availability can all affect your project's schedule. That can increase your costs, since interest is accruing over a longer period and (depending on the lender) may trigger a penalty fee. It's also more time that you're paying for other housing so you have somewhere to stay during construction.
Builder conflicts: Your builder is the backbone of the entire operation, and if they aren't living up to expectations you can face major headaches. Because the lender approved the builder as part of approving the loan, trying to switch builders midway can be challenging.
