Best Construction Loan Lenders

Nationwide Home Loans Group is powered by The Federal Savings Bank, a veteran-owned, federally charted bank. The bank has grown its services to lend in all 50 states and originates over $10 billion in home loans annually. The Nationwide Home Loans Group construction loan is available in all 50 states.

Their construction loan size minimum is $150,000. No mortgage payments are collected until the construction is complete.

The lender requires the borrower’s median of three credit scores to be at least 640. Down payments vary depending on the particular loan program. For example, their VA construction loan can be as low as 0% down, and their FHA loan can be as low as 3.5% down. Compared to most construction lenders requiring 20% down, the fact that Nationwide can offer these low down payment programs at low rates in a combined loan in all 50 states, is why they won our best overall category.

FMC is a full-service private money lender focused on borrowers who have been through tough times and don’t fit the traditional bank lending criteria. They offer asset-based lending as opposed to credit-based lending, so they are able to be more creative with their loan programs because the loans are backed by collateral.

FMC is very flexible on loan terms. Some programs have only short terms and some can offer very long terms. Everything will vary with your situation and chosen program.

Interest rates for their construction loans range tend to be higher than those of a normal mortgage. However, some have no prepayment penalties. With FMC, you’ll be able to roll the purchase and construction costs into a single loan closing. 

They have the ability to finance the combined loan to value (CLTV) up to 100%, so you can bring other loans or property collateral to the deal to make it work.

FMC is the best option for borrowers with low credit scores because they allow you to apply for a construction loan and a permanent mortgage combined into one program without needing to show proof of your credit score.

Nationwide Home Loans, Inc., is a regional lender focused on eight states. They have an efficient online presence for borrowers to connect with specialists for each state where they plan to build.

The down payment requirements relate to the loan program for which you qualify. If you are a veteran and qualify for a VA construction loan, there is no minimum or maximum limit. For an FHA loan, there are maximums depending on the area you are in. FHA loan limits update annually.

Rates for their One Time Close loans are locked in for 15 or 30 year terms. You only go through the process once to finance the land, construction, and home mortgage. This not only keeps your closing costs low, but it also gets you a rate that is closer to the lower permanent financing rates rather than the typical construction loan rates that range 5% to 7% higher. Credit requirements are flexible because the company caters to self-employed individuals who have trouble showing a steady income, as well as borrowers who have a few nicks and scrapes in their credit history.

The down payment requirements range from 0% for VA loans to 3.5% for FHA loans. First time homebuyers seem to gravitate towards FHA loans because of the low downpayment and easier approval. In fact, in 2020 83% of FHA loans went to first time homebuyers.

Nationwide Home Loans, Inc., wins best for first-time home buyers because they have loan officers that provide a full-service experience, coordinating with appraisers, title companies, the builder, and other third parties necessary to make your construction project a success. Their specialization in low down payment programs like VA and FHA and their One Time Close service make them one of the most affordable lenders for first-time home buyers.

Normandy is headquartered in Rochester, NY, but is fully licensed to offer their construction loan in 15 states. Their loan amounts range from $100,000 to $5 million. They have several construction loans such as a loan if you are the actual builder, another if you are hiring a builder, and loans to finance a newly built home that a builder built on speculation. Normandy also offers renovation construction loans for when the house is built but needs extensive renovation work requiring a licensed contractor.

Normandy could qualify you for a 10% down payment for properties appraised for $548,250 or less, and 20% down for properties appraised above that mark. You can wrap the land purchase into the construction loan, but you’ll still have to come up with 25% of the land’s purchase price in cash.

Normandy’s construction loan rates vary depending on your credit score, the size of your down payment, and your income. You must prequalify to see them. Credit score minimums are not published on their website, but they will contact you with a customized terms proposal when you complete their online prequalification form. In general, credit scores below 620 are more difficult to finance.

Normandy has an easy-to-find section on its homepage for borrowers to apply for pre-qualification, request construction draws, and make payments toward their loan. This convenience makes Normandy our best for online borrower experience.

Based in Wisconsin, GO Mortgage started in 1995 and the Single Close Construction Loan is their specialty. This loan, available in 35 states, works within the parameters of the government-backed mortgage programs known as the VA, Fannie Mae, FHA, and USDA. Therefore the credit scores, interest rates, down payment percentages, and minimum and maximum loan amounts are regulated by those programs.

For example, if GSF qualifies you for the FHA program, your down payment can be as low as 3.5%. For the VA or USDA loan programs, you may qualify for no down payment. If you use a Fannie Mae program, your down payment could be as low as 3%.

Loan interest rates for these government programs are very close to each other, typically within one percentage point. For a single-close construction loan, plan on paying 1.5% to 3% higher, depending on your credit score. The minimum loan amount often is $125,000. The minimum credit score for GO's single close construction loan is 640. However, 680 is minimum score for the Fannie Mae program. There is no maximum loan amount for the construction loans, but there are some limitations to how much the government agency will guarantee the loan for. The VA will normally guarantee loans up to $510,400. However, in more expensive counties they will guarantee up to $822,375 through GO or other lenders.

GO Mortgage Corporation has created a business model focused on a highly trained construction lending team with expertise in the low down payment government agency programs, so they have earned our nod for the best construction lender for you if your primary goal is a low down payment.

TD Bank was founded in 1852 in Portland, Maine. Their single-close construction loan is flexible and can be used if you already own the land or if you have an existing loan on the land. In that case, they will disperse money to pay that loan's balance off and roll it into their single-close loan.

Credit score minimums are not published. Credit score is taken into account along with other factors, such as the size of the down payment, the borrower’s income, and how much existing debt the borrower already carries. The same factors also dictate how TD Bank calculates your interest rate options. For example, you may have an adjustable-rate interest-only loan for the 12-month construction period, which automatically can roll into a fixed-rate loan for a 30-year mortgage on the finished property.

Down payment requirements are at least 20% for traditional financing.

TD Bank has won our award for best flexible-use construction lender because of their ability to blend features tailored to what the borrower wants and needs, such as adjustable and fixed rates, and a flexible-use, single-close program.

True to its name, VA Nationwide Home Loans lends in all 50 states. You are able to check your home’s eligibility for their program using their simple and short online form. 

Their featured loan is a single-close loan that lets you combine the purchase of the land, the construction of the house, and the 15- or 30-year mortgage all in a single rate-locked loan. No payments are due during the construction period. VA Nationwide Home Loans could qualify you for a 0% down payment, but you would still need to pay cash for the VA funding fee. 

VA Nationwide can offer loans up to $3,000,000 or more with their one-time and two-time close options.

The single-close convenience in every state with up to 100% financing available makes VA Nationwide Home Loans the best VA construction lender.