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Best construction loan lenders in 2022

An illustration of a house A-frame under construction
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Most people can’t afford to design and build their own home or pay for major improvements out of pocket, which is why many lenders offer construction loans — shorter-term loans used to finance the building or rehabilitation of a home. Here is Bankrate’s guide to the best construction loan lenders in 2022.


To determine the best construction loan lenders, Bankrate evaluated lenders based on several criteria, including affordability (annual percentage rate and fees); expediency (approval and closing times); and experience (including customer service support).

Best construction loan lenders

TD Bank

TD Bank mortgage review

Loan products Purchase and refinance; construction loans, conventional, jumbo, FHA, VA, home equity line of credit (HELOC), home equity loan, physician loan
Credit requirements Unavailable
  • Better Business Bureau (BBB)-accredited bank and lender
  • Construction loan borrowers only pay closing costs for one mortgage
  • Mortgages only available in 15 states and Washington, D.C.
Highlight TD Bank simplifies the lending process for construction loans by only requiring one application for construction and permanent financing (known as a construction-to-permanent loan).

U.S. Bank

U.S. Bank mortgage review

Loan products Purchase and refinance; construction and renovation loans, conventional, jumbo, FHA, VA, USDA, HELOC, home equity loan, interest-only, one- to four-unit loans
Credit requirements 620 for conventional loans; 740 for jumbo loans
  • Competitive rates published daily on website
  • Interactive lending portal
  • Government-backed loan products
  • Home equity options
  • Borrowers seeking construction loans must apply directly with a loan officer
Highlight U.S. Bank mortgage and Personal Checking Package customers can receive a closing cost credit of up to $1,000.


Truist mortgage review

Loan products Purchase and refinance; construction and renovation loans, conventional, jumbo, FHA, VA, USDA, HELOC, home equity loan
Credit requirements 620 for conventional loans
  • Online preapprovals
  • Rates published online
  • Branches in 17 states and Washington, D.C. for in-person support
  • Accredited by the BBB with an A+ rating
  • Loans not offered in Alaska, Arizona and Hawaii
  • Limited information regarding homebuyer eligibility online
Highlight Truist customers enjoy special incentives, although the specifics are not disclosed upfront; you’ll need to consult with a loan officer to get more information.

Flagstar Bank

Flagstar Bank mortgage review

Loan products Purchase and refinance; construction and renovation loans, conventional, jumbo, FHA, VA, USDA, home equity loan
Credit requirements 620 for conventional loans; 700 for jumbo loans; 580 for FHA loans
  • Available in all 50 states
  • Online prequalification
  • Flexible construction and renovation loan options
  • No origination fees
  • A+ BBB rating
  • No HELOCs
  • Lending fee schedule not easily accessible online
Highlight The bank’s One-Close construction loan offers a simplified draw schedule and one set of fees and closing costs.

Homebridge Financial Services

Homebridge Financial Services mortgage review

Loan products Purchase and refinance; construction and renovation loans, conventional, jumbo, FHA, VA, USDA, HELOC, home equity loan, interest-only, one- to four-unit loans
Credit requirements 640 for conventional loans; 680-700 for jumbo loans; 580 for FHA loans, VA loans and USDA loans
  • Offers an assortment of flexible construction, renovation, purchase and refinance products, including single-close construction loans
  • Streamlined application process
  • User-friendly online portal to submit documents and monitor status of application
  • Loans not offered in Utah
  • Mortgage rates not published online
Highlight Homebridge has a team of dedicated staff to assist you with the loan application process.

Construction loan requirements

Construction loan lenders have varying requirements, but they are typically based on the amount you borrow. Similar to other types of mortgages, your lender determines your eligibility for a construction loan by evaluating your creditworthiness, income, debt-to-income (DTI) ratio and other factors:

  • Credit score – Most lenders require a credit score of 680 or higher, but some might work with borrowers with lower credit scores.
  • DTI ratio – Lenders usually look for your debt obligations to total no more than 45 percent of your monthly income.
  • Down payment – A down payment between 20 percent and 30 percent is usually required, although some government loan programs might require less.
  • 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. The construction loan covers payments for the project during the building process and then converts to a permanent mortgage upon completion.

Generally speaking, mortgage lenders tend to have tighter restrictions for construction loans because the asset (the home) doesn’t exist yet.

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

What are construction loan interest rates?

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 to offer.

Construction loan vs. renovation loan

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.

A builder or borrower typically takes out a construction loan to cover the cost of building the house before securing a standard mortgage. The lender pays the builder in installments that follow each phase of construction. Before the completion of the project, borrowers usually only make interest payments and repay the loan once construction is complete.

Renovation loans, on the other hand, give homeowners access to funds to pay for home improvements. This funding can come in a variety of forms, such as a personal loan or a government-insured loan, or by taking out equity in your home. Overall, renovation loans aren’t as structured as construction loans, and borrowers have more options when it comes to accessing funds.

How to choose the best construction loan lender

Construction loans can be complex, which is why it’s best to work with a lender who has experience with this type of mortgage. Procedures and policies differ from lender to lender, so look for one that can feasibly work with your timeline and needs.

To find the best mortgage lender and get the lowest-cost loan, compare several construction loan lenders and their rates and terms, and also compare your interactions with them. If you’re looking for responsiveness, for example, take note of this in your communications with the loan officer. Ultimately, the best lender for you depends on your unique goals, preferences and financial situation.

How to apply for a construction loan

To apply for a construction loan, you’ll need to provide the lender with your employment history and financial information, including your income, assets and debts, as well as your contract with the architect or builder and their plans for the project. These plans should specify the total estimated cost to build so that the loan amount can be credibly established. Once your application is submitted, be prepared to answer any questions your lender might have and provide any additional documentation as needed. This will help expedite the underwriting and approval process and keep things on track.

Summary: Best construction loan lenders

With additional reporting by Allison Martin

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Written by
Josephine Nesbit
Josephine Nesbit is a former contributor to Bankrate.
Edited by
Mortgage editor