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Construction Loans

Build or Renovate Your Home with Flexible Financing

Construction loans allow you to finance the building or major renovation of a home from the ground up. Instead of taking out separate loans for land, construction, and the final mortgage, construction loan programs let you combine everything into a single, streamlined loan.

Two of the most common options are Conventional Construction Loans and FHA Construction Loans each designed for different borrower needs and financial profiles. You can also get construction loans for VA Home Loans, USDA and Investment properties

Conventional Construction Loans

A conventional construction loan is ideal for borrowers with strong credit who want flexible financing to build or extensively renovate a home.

Key Features:

  • One-time close construction-to-permanent loan
  • Finance land purchase, construction, and final mortgage in one loan
  • Fixed-rate or adjustable-rate options
  • Higher loan limits available
  • No upfront mortgage insurance
  • Suitable for primary, second homes, and some investment properties

Best For:

  • Borrowers with good to excellent credit
  • Buyers who want higher loan amounts
  • Custom or luxury home builds
  • Those looking to avoid mortgage insurance long-term

FHA One-Time Clos

FHA construction loans are designed to help buyers with lower down payments or more flexible credit qualify to build or renovate a home.

Key Features:

  • Low down payment (as little as 3.5%)
  • Flexible credit guidelines
  • Government-insured loan reduces lender risk
  • Finance purchase + construction or renovation in one loan
  • Fixed-rate options available
  • Available for primary residences only

Best For:

  • First-time homebuyers
  • Buyers with limited savings for a down payment
  • Borrowers with average or rebuilding credit
  • Buyers renovating older or distressed homes

Conventional vs. FHA Construction Loans — Quick Comparison

Feature

  • Minimum Down Payment
  • Credit Flexibility
  • Mortgage Insurance
  • Loan Limits
  • Property Use
  • Best For

Conventional Construction

  • Typically 10–20%
  • Stricter
  • None if 20%+ down
  • Higher
  • Primary, second, some investments
  • Strong credit, custom builds

FHA Construction

  • As low as 3.5%
  • More flexible
  • Required
  • FHA county limits
  • Primary only
  • First-time or credit-challenged buyers

Minimum Down Payment

Conventional : Typically 10–20%
FHA : As low as 3.5%

Credit Flexibility​

Conventional : Stricter
FHA : More flexible

Mortgage Insurance

Conventional : None if 20%+ down
FHA : Required

Loan Limits

Conventional : Higher
FHA : FHA county limits

Property Use

Conventional : Primary, second, some investments
FHA : Primary only

Best For

Conventional : Strong credit, custom builds
FHA : First-time or credit-challenged buyers

Which Construction Loan Is Right for You?

Choose a Conventional Construction Loan if you have strong credit, want higher loan limits, or are building a higher-end or custom home. 

Choose an FHA Construction Loan if you need a lower down payment, more flexible credit guidelines, or want a more accessible way to finance a home build or major renovation.