Best Construction Loan Lenders In 2026

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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.

Best construction loan lenders

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

• What’s the difference between a construction loan and a 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. 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.

• 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.

• Is a construction loan harder to get than a traditional mortgage?
  

  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.

• Methodology
  

  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).