While a regular mortgage, also known as a permanent loan, can assist you in purchasing an existing home, landowners can use construction loans to borrow money to build a house from the ground up. If you’re starting with raw land the usage of a construction loan is necessary.
While these loans are more difficult to obtain and frequently come with higher interest rates, many lenders can help you finance your project.
You should look for construction loans that provide cheap interest rates and flexible loan amounts. You can also find those who have low down payment requirements but will have credit restrictions. Still, it will make it easier for buyers to qualify.
Best Construction Loan Lenders
Construction loans are available in a wide range of geographic areas around the country from top lenders. Many lenders also provide a variety of building loans based on your history and situation.
Nationwide Home Loans Group
Nationwide Home Loans Group is an excellent choice for a construction loan, offering loans in the majority of states, reasonable interest rates, and low down payment requirements.
Their minimum construction financing amount is $125,000. Interest rates vary depending on the market, but Nationwide’s rate range is 1% to 1.5% higher than standard mortgages for a pre-built home. Of course, mortgage payments are not collected until the construction is finished.
The lender requires a credit score of at least 640 based on the borrower’s median of three credit scores. Down payments differ based on the lending package. For example, their VA construction loan can require as little as 0% down, while their FHA loan can require as little as 3.5 percent down. When compared to most construction lenders that require 20% down, Nationwide’s ability to offer these low down payment plans at low rates in a combined loan in 47 states is why they received our top overall category.
If you need a construction loan but have less-than-perfect credit, FMC Lending is a wonderful alternative. They provide fast funding and have no minimum credit score criteria. FMC is highly accommodating when it comes to lending arrangements. Some programs have very short periods, while others have very long terms. Everything depends on your position and program of choice.
The interest rates on their construction loans are typically greater than those on a standard mortgage. Some, on the other hand, have no prepayment penalty. You will be able to wrap the purchase and construction expenditures into a single loan closing with FMC.
The biggest bonus to choosing FMC is you can finance the combined loan to value (CLTV) up to 100 percent. This highlight means you can bring in other loans or property security to make the deal work, but that’s not all.
FMC is the greatest option for borrowers with poor credit scores because it allows you to apply for both a construction loan and a permanent mortgage in the same program without having to produce confirmation of your credit score.
Nationwide Home Loans, Inc.
Nationwide Home Loans, Inc. is an excellent choice for first-time buyers. One of the reasons being it offers low to no down payment options. The down payment requirements are specific to the loan program for which you are eligible. There is no minimum or maximum loan amount if you are a veteran and qualify for a VA construction loan.
Nationwide Home Loans, Inc. is the greatest choice for first-time home buyers. Their loan officers provide a full-service experience by collaborating with appraisers, title firms, the builder, and other third parties needed to ensure the success of your construction project.
Read More: 5 Types of Loans to Know About