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Andrew Dehan writes about home loans, real estate and personal finance. He's taken the NMLS Loan Originator education classes and passed the MLO SAFE test. Besides Bankrate, his work has been published by Rocket Mortgage, Forbes Advisor and Business Insider. He’s also a poet, musician and nature-lover. He lives in metro Detroit with his wife and children.
Taylor Freitas is a freelance writer with extensive experience writing about real estate, mortgages and personal finance topics, and has contributed to publications including Bankrate, LA Weekly, CNET and ZDNet.
Katie Lowery is a Bankrate content strategist and editor on the Loans and Home Lending teams, where she shapes content to help people navigate decisions around borrowing money, personal finance and overall financial health.
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A construction loan is a short-term, high-interest loan used to finance the construction of a home. Funds are paid out in phases over the course of construction and typically cover land, materials, contractor labor and permits. They tend to have stricter qualification requirements than traditional mortgages, but are available through a wide range of lenders, including large national banks. Here are our picks for the best construction loan lenders in 2026.
PNC Bank scores well for affordability, availability and borrower experience. The bank’s construction loan is a standard construction-to-permanent loan that begins with interest-only payments, then converts to a mortgage when the build is complete.
Availability: Alabama, Arizona, California, Colorado, Florida, New Mexico, Tennessee, Texas and Washington*
Loans offered: Conventional, jumbo, FHA, VA, USDA, construction
Where to find: Branch locations and online
*The bank or lender offers construction loans in these states only. It might offer other types of mortgages in other states.
Pros
Offers a wide range of mortgage products
Online and in-person options to apply
Application can be tracked online
Cons
Limited mobile app functionality
Below-average J.D. Power rating for mortgage servicing
Wells Fargo scores well for affordability, availability and borrower experience. The bank’s construction loan includes the option to pay for the “Builder Best Extended Rate Lock,” which keeps your interest rate as-is for the duration of the project, up to 12 months.
Availability: All U.S. states
Loans offered: Conventional, jumbo, FHA, VA, USDA, construction
Where to find: Branch locations and online
Pros
Offers a program to lock in your rate for six to 12 months while your home is being built
Massive branch network
Will consider nontraditional credit references in application process
Offers low-down payment options to assist lower-income borrowers
Cons
Below-average customer satisfaction scores and negative past customer reviews
Alliant Credit Union earns points for its national lending footprint and customer service contact options, including phone support and online chat that’s available six days per week. Its construction loans also include a 365-day rate lock option, so you’ll know what your rate will be when your home is built.
Availability: All U.S. states except Maryland
Loans offered: Conventional, jumbo, FHA, VA, USDA, refinancing and more
Where to find: Online
Pros
Easy-to-use website with breakdown of customized rates
Low- and no-down payment options, plus a no-PMI product
Up to $9,500 back through the Alliant Home Rewards program
Tiered rate-locks: up to 365 days for construction loans and up to 90 days for refinance and purchase loans
Pennymac lands a spot on this list for its competitive rates (which tend to be lower than the national average) and its discount programs for borrowers. No matter where you’re located within the U.S., you can get a mortgage from Pennymac, since it’s licensed to lend in all 50 states.
Availability: All U.S. states
Loans offered: Conventional, jumbo, FHA, VA, USDA, refinancing and more
Bank of America gets points for availability, since it offers a variety of mortgage products in all 50 states. With its construction-to-permanent financing program, you’ll make interest-only payments while your house is being built and only pay a single set of closing costs for both loans. In addition, you can lock your rate for up to 12 months (through its Builder Rate Lock Advantage program) and get a one-time float-down option if rates drop.
Availability: All U.S. states
Loans offered: Conventional, jumbo, FHA, VA, refinancing and more
Where to find: Branch locations and online
Pros
Offers grant programs to help low- and moderate-income buyers
Displays mortgage rates and refinance rates online
Awards discounts for Preferred Rewards customers
Cons
Has limited transparency around borrower requirements
Does not offer USDA loans
How to apply for a construction loan
Applying for a construction loan is similar to applying for a mortgage on an existing home, with a few extra steps and likely a longer timeline. Here are the basic steps:
1. Review construction loan requirements
To qualify for a construction loan, you’ll need to meet the lender’s requirements. These include:
Credit score: Many lenders require a credit score of 680 or higher for a construction loan, but some might work with borrowers with lower credit scores.
Debt-to-income (DTI) ratio: Lenders usually look for your debt obligations to total no more than 45% of your monthly income.
Down payment: Be prepared to put down 20% or more, unless you’re applying for an FHA or VA construction loan.
Construction plan: Lenders usually require a detailed plan before funding the first phase of the project.
Repayment plan: In addition to the construction loan itself, you must also qualify for permanent mortgage financing. Most construction loans convert to a permanent mortgage upon completion of the home.
2. Shop around for lenders and rates
Not all mortgage lenders offer construction loans, so you might have to expand your search to uncover options. Banks tend to offer them more so than credit unions or online lenders, so it might make sense to start there. Some banks may also offer discounted rates or preferred pricing if you have a personal or business relationship with them.
3. Submit paperwork
Once you connect with a lender and determine your eligibility, submit your loan application, along with the contractor agreement and plans from your architect or builder. The lender not only wants to know the cost of the build, but also the scope of the work and timeline.
As the lender underwrites your application, be prepared to answer any questions or provide additional documentation as needed. Staying responsive throughout the process will help you avoid closing delays and get the funds to your contractor as soon as possible.
Types of construction loans
Construction-to-permanent loan: A loan to pay for construction costs, which then converts to a permanent mortgage once the home’s finished and ready for occupancy
Construction-only loan: A loan to pay for construction costs by disbursing funds in increments as project milestones are met; generally has a repayment period of one year or less
Owner-builder construction loan: A loan that operates like a construction-to-permanent or construction-only loan, but with one key difference: the borrower is also the builder
End loan: The mortgage on the property once construction is complete
Frequently asked questions
A construction loan is a short-term loan designed to help with the purchase of a plot of land and the construction of a home, or pay for major renovations to an existing home. Renovation loans, on the other hand, pay for home improvements. This funding can come in a variety of forms, such as a personal loan or a government-backed loan, or by taking out equity in your home. Renovation loans aren’t as structured as construction loans; they’re usually unsecured, and borrowers have more options when it comes to accessing funds.
Construction loan interest rates are generally higher than the mortgage rates for standard home purchases, in part because in a build situation, there’s no home (yet) to secure the construction loan against, making it riskier for the lender.
For any type of mortgage, you’ll need to qualify based on the lender’s requirements. In that sense, a construction loan is no harder to get than a traditional mortgage, provided you qualify. The process of applying for a construction loan, however, might be more difficult than your average homebuying mortgage, because you’ll need to provide more paperwork about the build and contractor, as well as follow the lender’s requirements in terms of timeline, inspections and payouts.
To identify the best mortgage lenders for construction loans, Bankrate surveyed 75 lenders nationwide and scored each based on its self-reported data and research by Bankrate staff. We assigned scores based on a lender’s affordability, availability and borrower experience, giving equal weight to each category. Lenders that received a Bankrate Score of 4.7 out of 5 or higher and that publicize construction loans on their websites appear on this page.
To receive a top score from Bankrate, lenders must offer mortgage rates lower than Bankrate’s tracked averages, and they generally also offer low-down-payment loan options and assistance for first-time homebuyers. In addition, lenders are usually licensed in more than 30 U.S. states, offer conventional and government-backed loans and typically provide at least one product for borrowers with credit scores of 620 or lower. Finally, our top-scoring lenders tend to make it easy for borrowers to compare rates and manage much of the loan process online, and they offer multiple options for customer support and generous rate-lock periods. Bankrate’s evaluations are independent and are not influenced by lender partnerships or advertising relationships. Read more about how Bankrate scores are determined here.
Some lenders may appear as honorable mentions, despite earning a Bankrate score of 4.7 or higher, due to eligibility restrictions or limited availability (15 or fewer states).
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Dehan, A., & Freitas, T. (2026, February 25). Best construction loan lenders in 2026. Bankrate. Retrieved March 02, 2026, from https://www.bankrate.com/mortgages/best-lenders/construction-loan-lenders/
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Dehan, Andrew & Taylor Freitas. "Best construction loan lenders in 2026." Bankrate. 25 February 2026, https://www.bankrate.com/mortgages/best-lenders/construction-loan-lenders/.
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Dehan, Andrew & Taylor Freitas. "Best construction loan lenders in 2026." Bankrate. February 25, 2026. https://www.bankrate.com/mortgages/best-lenders/construction-loan-lenders/.
