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Top construction loan lenders of 2021

Society Starting interest rate Minimum credit score Loan conditions (range) Maximum loan amount
National Home Loan Group

Best overall
Varied 640 15 or 30 years old $ 548,250
CMF loan

Ideal for a bad credit score
Varied Nothing Varied Varied
Nationwide Home Loans, Inc.

Ideal for first-time buyers
Varied Varied 15 or 30 years old Varied

Better online borrowing experience
Varied 620 Varied $ 3,000,000
GO Mortgage Company

Ideal for low down payments
Varied 640 to 680 30 years Varied
TD Bank

Ideal for flexible use
Varied Varied 30 years Varied
VA nationwide Mortgage loans

Ideal for veterans
Varied 640 15 or 30 years old $ 548,250

Guide to Choosing the Best Construction Loan Lender

Determine your need for a construction loan

Before applying for a construction loan, you should assess your situation to determine exactly what type of construction loan is best for you. You need to consider factors like your savings for a down payment, your credit rating, and the overall loan amount when looking for lenders. It is a good idea to receive quotes from contractors so that you have an estimate of the total cost of the project.

Compare construction lenders

There are a few different factors that you should keep in mind when selecting a home improvement loan or lender. These include:

  • Low prices: The lower the rates on your construction loan, the less interest you will end up paying over time. You should look for a loan with rates as low as possible.
  • Flexible down payment terms: While some lenders require a standard 20% down payment, others are more flexible. Depending on how much you’ve saved, you should look to a lender with flexible down payment requirements.
  • Flexible credit score requirements: Just because you don’t have a perfect credit score doesn’t mean you can’t get a construction loan. Some lenders allow applications from borrowers with fair credit.
  • Geographical position: Make sure you choose a lender that serves your area.
  • Customer service: You should look for lenders with a history of high customer satisfaction and strong customer support.

Apply for a construction loan

To apply for a construction loan, you will need a few types of documents. These include architectural plans and drawings, your builder’s certifications, building code compliance, and a schedule of periodic inspections. You will also need to provide a detailed construction budget and schedule. Before applying, it’s also a good idea to make sure your finances are in order. You need to make sure that your credit score is as high as possible, that your debt-to-income ratio is low, and that you have enough savings to cover the cost of a down payment and closing costs.

Frequently Asked Questions

What is a construction loan?

A construction loan is a short-term loan, typically for 12 months, that a builder or home buyer uses to finance the construction of a new home. Different lenders have variations on construction loans. For example, there are loans for builders, loans for home buyers, loans for the construction period only, and combination loans, sometimes referred to as single-close loans, which wrap around the financing of the purchase of the land, of the construction of the house and the permanent mortgage in a single approval process.

Can you get a construction loan with 10% down payment?

Yes, you can get a 10% down payment for a construction loan, but it depends on the lender and the program they are using. Traditionally funded construction loans will require a 20% down payment, but there are government agency programs that lenders can use to reduce down payments. Lenders who offer VA and USDA loans can qualify borrowers for a 0% down payment. For FHA loans, your down payment can be as low as 3.5%. If the lender uses a Fannie Mae loan, your down payment might only be 5%.

What Are the Interest Rates for Construction Loans?

The interest rate ranges differ depending on whether you have a construction loan to finance only the construction period or whether you have a single-close combination loan that combines the construction and the permanent mortgage. The construction loan only is considered a bit riskier. The latter’s rates are in the range of 5% to 10%, and generally at least 5% higher than traditional permanent mortgage rates for buying an existing home.

Single-closing combination construction loans are a bit closer to the lower rates of permanent finance loans because they have a much longer term, say 30 years. Your credit history, and sometimes the amount of your down payment, will affect the interest rate on your construction loan.

How to qualify for a construction loan

A lender will look at more than just your credit score and your down payment before approving your construction loan. You will need to produce architectural plans and drawings, your builder’s certifications, and a detailed construction budget and schedule. The lender will also want to see building code compliance and a schedule of periodic inspections to allow the gradual release of construction loan funds.

From the borrower’s part, most lenders will want a credit score above 700 for traditional financing, but with special programs the minimum might be in the range of 600. Your down payment should be at least 20%, unless you qualify for one of the government agency loan programs. Your income, and especially your debt-to-income ratio, will also matter.


We looked at 24 construction lenders before choosing the top seven. To be among our best, we wanted lenders with a broad geographic reach so that our choices could be used by a majority of our readers.

We’ve researched lenders with expertise in multiple construction loan programs so you can find multiple options without having to spend your valuable time interviewing multiple companies. We selected companies whose lower end of their interest rate ranges most closely resembled traditional permanent financing because these are the lowest rates available.

Finally, we’ve favored lenders with lower down payment requirements and lower minimum credit scores to increase your chances of finding a competitive construction loan.

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