Construction Loan Lenders - Security America Mortgage

Construction Loan Lenders: Every Type Compared, and How to Pick the Right One for Your Build

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Choosing a construction loan lender is a different decision than choosing a mortgage lender, and treating it the same way is how builds go sideways. A purchase lender’s job ends at closing. A construction lender lives inside your project for a year: approving your builder, releasing money in draws, sending inspectors, managing what happens when the framing stage runs six weeks long. The rate matters. The administration matters more.

I am Garrett Puckett, Founder and CEO of Security America Mortgage. I have spent 20 years in construction lending, and this page is the guide I wish every borrower read before their first lender call: what each type of construction lender actually offers, what construction-to-permanent means and why it should be your default, the questions that reveal whether a lender really runs this business, and which lender type fits which builder.

Foundation

What Is a Construction Loan Lender?

Definition

A construction loan lender provides financing specifically for building a new home or, depending on the loan program, completing substantial construction or renovation work. Unlike a traditional mortgage where most loan proceeds fund the purchase of a completed property, construction financing releases money in stages as work on the home progresses.

These staged payments are called draws. The lender does not hand over the full loan balance at closing. Instead, funds are released in tranches tied to verified construction milestones, with each draw typically preceded by an inspection confirming the work has been completed.

The draw structure is one of the most important things that separates construction lenders from purchase lenders. A purchase lender's job ends at closing. A construction lender administers the loan for the entire build -- releasing draws, ordering inspections, managing what happens when a milestone runs behind or a subcontractor dispute stalls a stage.

This is why the lender's administration process matters as much as their rate. Slow draws strain your builder, create cash flow gaps, and can push a project weeks off schedule. Fast, defined draw procedures keep everyone on track.

The exact draw schedule depends on the lender, builder, loan program, and construction contract. Most programs allow four to six draws. Some specialist lenders offer more.

Typical Draw Schedule

Money releases tied to verified milestones

Site preparation and foundation

Framing

Roofing and exterior work

Plumbing, electrical, and mechanical systems

Interior construction

Final completion

Each draw is preceded by an inspection confirming the milestone is complete. Inspection speed varies by lender -- ask before you sign.

How Construction Financing Differs from a Purchase Mortgage

Construction loans involve additional documentation and project oversight compared with a traditional purchase mortgage because the lender is financing a home that does not yet exist.

🏠 Traditional Purchase Mortgage

Property at closingCompleted, occupied

Funds disbursedOne lump sum

InspectionsAppraisal only

Builder reviewNone

Budget oversightNone

Lender involvementEnds at closing

🛠 Construction Loan

Property at closingDoes not yet exist

Funds disbursedIn draws by milestone

InspectionsBefore each draw

Builder reviewRequired upfront

Budget oversightFull project budget reviewed

Lender involvementActive for entire build

Lender Landscape

The Six Types of Construction Loan Lenders

The category matters more than the name. Down payments, rate structures, program availability, and actual construction expertise vary more between these six types than almost anywhere else in lending.

🏭

Local & Regional Banks

The traditional home of construction lending. Keep loans on their own books -- local underwriting judgment, area builder familiarity, flexibility on unusual projects. Trade-offs: 20 to 25 percent down, floating rates during construction, committee-pace approvals.

Best fit: Strong equity, complex custom builds, existing banking relationship.

🏠

Credit Unions

Similar model to community banks with member pricing that sometimes beats them. Construction programs vary wildly: some run excellent in-house programs, many offer nothing. Worth one call if you are already a member.

Best fit: Existing members with 20 percent down and standard projects.

🌎

National Mortgage Lenders

Household names advertising construction loans nationally. Some run genuine programs; many advertise the keyword and route applicants elsewhere. The gap between marketing and actual capability is widest here. The 10 screening questions matter most in this category.

Best fit: Borrowers who verify the program is real before applying.

🏛

Specialist Construction Lenders

Lenders whose core business is construction-to-permanent lending, including government-backed programs most others avoid. This is our category. Specialists run their own draw administration, qualify builders in-house, and structure single-close loans as the default. For FHA and VA construction programs, specialists are effectively the only category that runs them -- the VA One Time Close with $0 down and no payments during construction lives almost exclusively here.

Best fit: Most borrowers. The only category running VA and FHA single-close programs.

🏠

Builder-Affiliated Lenders

Production builders' in-house financing arms, built to close the builder's contracts with incentives attached. Convenient, sometimes genuinely competitive after incentives. Always compare against one outside quote gathered the same day -- the incentive math is designed to be hard to compare.

Best fit: Production builder buyers who get an outside benchmark first.

📈

Private & Hard Money Lenders

Speed and flexibility at 10 to 13 percent plus points, for projects banks decline: spec builds, investors, credit events, land-heavy deals. A legitimate investor tool. The wrong tool for a family building a primary residence that qualifies elsewhere.

Best fit: Investors, spec builds, credit events. Not primary residences.

★ For Veterans

Are You a Veteran Looking for a Construction Loan?

Many veterans search for a traditional construction lender without realizing their VA home loan benefit may also be used to build a home.

VA permits eligible borrowers to use VA-backed financing for home construction, including qualifying one-time-close construction-to-permanent loans. However, not every lender that offers ordinary VA mortgages offers VA construction loans. The program requires specific lender expertise, builder qualification processes, and draw administration that most VA purchase lenders do not run.

"We specialize in helping eligible Veterans finance the land and construction of their future primary residence through VA construction financing, subject to VA and lender requirements. We handle the builder qualification, the draw schedule, and the COE -- so Veterans are not left trying to assemble a program their lender has never closed."

Garrett Puckett • Founder & CEO, Security America Mortgage • NMLS #355253

△

VA Construction Is Our Core Business

We are not a purchase lender that added construction to a product list. The VA One Time Close is our national specialty. We have closed builds across ten states.

🛠

We Qualify Your Builder Directly

Since March 2025, builders no longer need a VA Builder ID. We qualify them on licensing, insurance, experience, and budget. Fast, defined process -- days, not committee weeks.

📈

$0 Down, No Payments During the Build

For eligible veterans, the VA One Time Close requires no down payment and no mortgage payments during construction. The loan converts to your permanent mortgage at completion. No PMI, ever.

Check your VA construction eligibility. We pull your Certificate of Eligibility electronically, price the program for your build, and give you a written quote -- same day. If your situation fits a different lender type, we tell you that too.

Check Eligibility →

Also see: VA construction loan overview | Disabled veteran benefits | VA funding fee | Minimum credit score

The Most Important Decision

Construction-to-Permanent vs. Standalone Construction Loans

Every construction lender sells one of two structures. The difference costs real money and shapes your entire build experience.

✓ Your Default

Construction-to-Permanent
(Single Close)

Usually Worse

Standalone Construction
(Two Close)

ClosingsOne closing, one set of costs

ClosingsTwo closings, two sets of fees

Rate lockedBefore ground breaks

Rate lockedAt second closing -- after construction, at whatever rates exist

Requalification requiredNo -- one underwrite at the start

Requalification requiredYes -- at completion, regardless of life changes

Rate risk during buildNone -- locked from day one

Rate risk during buildFull exposure if rates rise mid-project

Government programsFHA and VA run on this model by design

Government programsNot applicable -- banks that only offer this hide the alternative

"Is this a true single close?" should be your first question to any construction lender. Lenders who only offer two-close structures frequently present them as if no alternative exists. Our VA One Time Close and construction-to-permanent programs are single-close by design. VA construction loan overview covers the mechanics.

Comparison Framework

What Actually Differs Between Lenders

Compare these seven items, not just the rate quote. The rate is the last number to look at, not the first.

Down Payment

20 to 25 percent at most banks. 3.5 percent on FHA single-close programs. $0 for eligible veterans on the VA One Time Close. The spread between lender types is the largest single cost difference in construction lending.

VA OTC: $0 down • VA funding fee details

Rate Structure During Construction

Floating (prime plus a margin) at most banks versus locked from day one on most government single-close programs. A floating build rate in a rising market is a budget with a hole in it.

Ask every lender: locked or floating?

Payments During Construction

Most conventional structures bill monthly interest on drawn funds. VA single-close structures handle construction interest inside the project -- no borrower payments until the home is done.

Confirm in writing before signing.

Builder Approval Process

Every real lender vets your builder on licensing, insurance, experience, and financials. Fast defined processes (days) versus committee review (weeks) change your entire project timeline.

Since March 2025, VA lenders qualify builders directly -- no VA Builder ID required.

Draw Administration

Who inspects, how fast draws fund after inspection, how many draws the schedule allows. Slow draws strain your builder relationship more than anything else in the project.

In-house vs outsourced inspection matters. Ask specifically.

Contingency and Overrun Handling

Good lenders build a contingency reserve into the budget upfront. Ask what happens when the project runs over -- because projects run over. No contingency requirement means the budget review was not real.

Budget reviews without contingency are a red flag.

Extension Policy

Builds run long. A lender with a defined extension procedure planned for it. A lender without one will improvise on your dime.

Get the extension procedure in writing before you close.

Land Equity

Already Own Your Land?

Owning the land where you intend to build can affect how your construction loan is structured.

Depending on the loan program and lender guidelines, existing land equity may be considered as part of the transaction.

The lender will generally need to determine:

Current land ownership

Any existing liens or land loans

Land value

When the property was acquired

Amount originally paid

Construction budget

Proposed completed value

Do not assume that owning land automatically eliminates every cash requirement. How land equity is treated depends on your loan program and transaction.

Talk With a Construction Loan Specialist →

Land Acquisition + Construction

Buying Land and Building a Home

Some construction financing structures may allow land acquisition and home construction to be financed as part of the same overall transaction.

This can potentially be useful when you have found your lot but have not yet purchased it.

Before buying land, however, investigate whether it is suitable for the home you want to build. Important considerations can include:

Zoning

Building restrictions

Utilities

Water and sewer availability

Septic requirements

Road access

Flood zones

Soil conditions

Surveys

Easements

HOA restrictions

Local permitting

⚠

A cheap parcel of land is not necessarily an inexpensive place to build.

Site-development costs can materially change a construction budget. Utilities that need to be run to the site, septic systems, road access, clearing, grading, and retaining walls are real line items. Review the full site-development scope with your builder before the lot purchase.

For Veterans & Military Families

VA Construction Loan Lenders

Eligible Veterans, active-duty service members, and certain surviving spouses may be able to use their VA home loan benefit to finance construction of a primary residence.

However, there is an important distinction borrowers should understand:

Important Distinction

A lender offering regular VA purchase loans does not necessarily offer VA construction loans.

Construction lending requires additional operational processes, including management of construction draws, builder requirements, inspections, and construction documentation. That can make finding an experienced VA construction loan lender more difficult than finding a lender for a traditional VA home purchase.

A VA construction loan may potentially provide qualifying borrowers with benefits associated with the VA Home Loan Program, subject to VA requirements, lender guidelines, entitlement, property eligibility, and individual qualification.

Depending on the transaction and borrower eligibility, those benefits may include:

The possibility of financing without a traditional down payment requirement

No monthly private mortgage insurance requirement

VA-backed financing

Construction-to-permanent financing

Potential funding-fee exemptions for eligible borrowers

Not every borrower or construction project will qualify.

Building With Your VA Home Loan Benefit?

Security America Mortgage works with Veterans and military families seeking financing for new home construction. We specialize in the VA One Time Close -- a single closing that covers land, construction, and your permanent mortgage. We pull your COE electronically, qualify your builder directly, and give you a written quote same day, subject to VA and lender requirements. See also: VA construction overview | funding fee | VA and PMI

Get Started →

Due Diligence

The 10 Questions to Ask Any Construction Lender

A real construction lender answers all ten specifically. An advertiser generalizes, transfers you, or promises a specialist will call back. That call never carries good news.

How many construction loans did you close in the last 12 months?

Is this a true single-close construction-to-permanent loan, or two closings?

What is my rate during construction: locked, or floating?

Do I make payments during the build, and on what?

How do you approve my builder, and how long does that take?

Who runs draws and inspections -- in-house or outsourced -- and how fast do draws fund?

What contingency reserve do you require, and what happens on overruns?

What happens if construction runs past the loan term?

What are the down payment options, including FHA and VA if I qualify?

Can you show me a full Loan Estimate for this structure today?

What the Answers Reveal

Volume answers Q1 -- under 12 in the last 12 months means construction is not their core business. Questions 2 and 3 together reveal whether you are being sold a two-close product at floating risk. Q6 is the one most borrowers skip and regret: slow draws break builder relationships before the roof goes on. We answer all ten on the first call, in writing. Call (855) 701-2816 or apply online.

Warning Signs

Red Flags

Each of these signals a lender who has not run a real construction program or is not telling you about a better option. Stop the conversation and ask the 10 questions.

✗ A quoted rate with no discussion of draws, builder review, or the construction period -- they priced a purchase loan and will discover the mistake inside your timeline.

✗ "We'll do the construction loan and refinance you after" presented as the only option, without disclosing single-close alternatives.

✗ No contingency requirement at all, which sounds friendly and means the budget review was not real.

✗ Builder approval described as a formality.

✗ A veteran being quoted 20 percent down without anyone mentioning the VA program or the VA One Time Close exists.

✗ Pressure to sign the builder contract before financing structure is confirmed in writing.

The most common red flag we see: Veterans quoted conventional terms with 20 percent down when they qualify for the VA One Time Close at $0 down with no payments during construction. The lender either does not run the program or did not ask about service history. We ask on the first call.

Situational Guide

Which Lender Type Fits Your Situation

The right lender type depends on your down payment, eligibility, and project type -- not on who ranks highest for "construction loan lenders near me."

🏭

Strong equity, complex custom build, existing relationship

Your local bank earns the first call -- then benchmark against a specialist's single-close quote. The comparison takes one afternoon and routinely reveals a better structure.

📈

Limited down payment

FHA single-close programs at 3.5 percent down, through specialist lenders, because most banks do not run them. Start with our construction-to-permanent overview.

★

Veteran or eligible service member

The VA One Time Close beats everything else on this page: $0 down, no payments during construction, no mortgage insurance, and it lives almost exclusively with specialist lenders. Our VA construction loan guide covers the program. Check your COE eligibility here.

🏠

Buying from a production builder

Compare the in-house incentive package against one outside quote, same day. Ten minutes, routinely worth thousands. The incentive math is designed to be hard to compare without a benchmark.

🔄

Investor or spec build

Private lenders and select banks. Price the money as a project cost and model the exit before you sign. The VA and FHA single-close programs require owner-occupancy and do not apply here.

🌎

Rural property

Check the specialist category first -- rural comps and land values scare generalist underwriters off files that specialists close routinely. We lend in rural areas across our ten-state footprint. See our state coverage.

"Construction loan lenders near me" is the wrong search. Construction expertise is not local. Your builder is local. The appraiser and draw inspectors are local. The lender's actual work -- structuring, underwriting, draw administration -- happens wherever the expertise lives, entirely by phone and electronic signing. We lend across Texas, California, Florida, Georgia, Alabama, Arkansas, Illinois, Maryland, Pennsylvania, and Tennessee.

Frequently Asked Questions

Construction Loan Lenders FAQ

01Who offers construction loans?

Local banks, some credit unions, a minority of national mortgage lenders, specialist construction-to-permanent lenders, builder-affiliated lenders, and private lenders. Programs, down payments, and competence vary more between these categories than almost anywhere else in lending. See our VA One Time Close guide for the specialist program most borrowers qualify for and never hear about.

02What is a construction-to-permanent loan lender?

A lender offering single-close loans that fund the build and convert automatically into your permanent mortgage: one closing, one set of costs, financing locked before ground breaks. Many banks only offer two-close structures without disclosing the single-close alternative exists.

03What down payment do construction loan lenders require?

Typically 20 to 25 percent at banks. 3.5 percent on FHA single-close programs. $0 for eligible veterans on the VA One Time Close. The program, not the negotiation, determines the number.

04Do I make payments during construction?

On most bank structures, yes -- monthly interest on drawn funds. On the VA single-close, no payments until the home is complete. Ask every lender specifically and get the answer in writing before signing anything.

05Are construction loan rates higher than mortgage rates?

Construction phases typically price somewhat above standard purchase rates -- floating at banks, locked on most government single-close programs. The structure of the rate matters as much as its level. A floating rate in a rising market is an open budget hole.

06What credit score do I need for a construction loan?

Commonly 680 plus at banks, more flexible on government programs. Our VA construction minimum is 640. See our minimum credit score guide for what moves the number in practice.

07Can I be my own general contractor?

Most lenders, including government single-close programs, require a qualified licensed builder rather than an owner-builder. A few banks and private lenders allow it with documented experience and larger down payments.

08Is a hard money construction loan a bad idea?

It is an expensive tool with legitimate uses: investor projects, spec builds, credit events, land-heavy deals that banks decline. For an owner-occupied primary residence that qualifies for FHA or VA programs, the cost rarely justifies it.

09Do construction loan lenders approve my builder?

Every real one does: licensing, insurance, experience, and financial review. For VA loans since March 2025, the lender performs this qualification directly with no VA registration required of the builder. Slow or vague builder approval is a red flag.

10How do I find construction loan lenders near me?

Search for licensed-in-your-state expertise rather than proximity. The build is local; the lending is not. We lend across Texas, California, Florida, Georgia, Alabama, Arkansas, Illinois, Maryland, Pennsylvania, and Tennessee. Apply here or call (855) 701-2816 for same-day answers on structure and builder approval.

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Our Reviews Speak For Themselves

         Posted on Google  
   
   S W 
 
 
 
 Trustindex verifies that the original source of the review is Google. Mark and Nadia were a pleasure to work with on my VA Construction loan.  Mark went above and beyond to explain the entire process.  Due to my situation, they were proactive in getting me a POA, which made closing simple.  Every time I had a question, Mark would answer my call even after we closed on the loan.  My wife and I are pleased and highly recommend Security America Mortgage.
  
 
      Posted on Google  
   
   Felicia Plybon 
 
 
 
 Trustindex verifies that the original source of the review is Google. Jason was the absolute BEST! He was very knowledgeable, thorough, patient and walked us through the entire process. Will definitely be referring others to him. You dont see this kind of customer service anymore.
  
 
      Posted on Google  
   
   Bryan Castleberry 
 
 
 
 Trustindex verifies that the original source of the review is Google. Jason and his team deliver stellar service with honesty and integrity.   Number 1 in my book.   Every loan we’ve worked with them on over the years has been smooth and seamless.    Best VA lender team in Texas!   I highly recommend Security America Mortgage.
  
 
      Posted on Google  
   
   Steven Kuhn 
 
 
 
 Trustindex verifies that the original source of the review is Google. Always honest, on point and so very helpful. Excellent work!
  
 
      Posted on Google  
   
   Jose Reyes 
 
 
 
 Trustindex verifies that the original source of the review is Google. Can't say anything bad about Jason and the team. Great communication and explained everything. Definitely recommend, especially if you're looking for a VA lender.
  
 
      Posted on Google  
   
   James Reece 
 
 
 
 Trustindex verifies that the original source of the review is Google. We had an exceptional experience working with Jason and Nadia! From the very beginning, they were honest, transparent, and clear—no surprises along the way. They managed to close two loans for us in just 12 business days, which is incredible. Their professionalism and efficiency made the entire process smooth and stress-free. Highly recommend them to anyone looking for a trustworthy and responsive mortgage team!
  
 
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   Mary K 
 
 
 
 Trustindex verifies that the original source of the review is Google. Security America Mortgage are ROCK*STARS, and I can’t recommend them enough! My experience with them, and specifically with Jason and Nadia, was absolutely outstanding.

The entire team was incredibly friendly, professional, and helpful from start to finish. They were truly engaging and made the usual complex mortgage process feel seamless and stress-free. There was a genuine, family-like feeling that set them apart from every other company I considered.

They exceeded all of my expectations and truly went above and beyond to provide exceptional service. If you're looking for a mortgage lender who is not only a professional but also a pleasure to work with, look no further. Thank You!
  
 
      Posted on Google  
   
   Benjamin Wilson 
 
 
 
 Trustindex verifies that the original source of the review is Google. I can't say enough good things about Jason & Nadia. They made purchasing a home a walk in the park, compared to the horror stories I heard about. Security America Mortgage will always be the only company I refer people too.
  
 
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   Inna Makarenko 
 
 
 
 Trustindex verifies that the original source of the review is Google. Jason has been such a gem with helping me figure out the way forward with our home renovation project. Our situation is quite complicated and he took the time to untangle everything, explain it like I'm five (which was much needed and appreciated!). He was very knowledgeable and even took the time to talk to me again after we figured out that I needed a product he didn't provide. Such fantastic service is rare these days.
  
 
  
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