Construction Loans in Arkansas

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4 Best Construction Loans in Arkansas

Key Terms

  • Construction loans are a type of financing used to fund the construction of a new building or renovation of an existing one. In Arkansas, construction loans are typically short-term loans with high interest rates and require borrowers to provide significant collateral to secure the loan.
  • When considering a construction loan in Arkansas, borrowers should carefully evaluate the terms and conditions of the loan, including interest rates, repayment schedules, fees, and requirements for collateral. It is also important to work with a lender who has experience with construction loans and understands the local market.
  • There are several types of construction loans available in Arkansas, including construction-to-permanent loans, stand-alone construction loans, and owner-builder construction loans. Each type of loan has its own unique features and benefits, so borrowers should carefully consider their needs and goals when selecting a loan product.

Arkansas is a state in the Southern United States known for its beautiful landscape, many lakes and rivers, as well as its many national parks, including Crater of Diamonds State Park, the country’s only diamond park. Arkansas also has a variety of industries, including manufacturing and financial services.

The population of Arkansas increased by around 4% between 2020 and 2022, which means that there are now around 3 million residents living in the state. The average price of a home in Arkansas is $156,800, which is about $5,000 more than it was in 2020, according to the Arkansas Economic Development Commission. With real estate in such high demand, home buyers are seeking alternative options to a typical refinance or mortgage loan. One of the most popular options is a home construction loan. With these home loans, a borrower can take advantage of the loan amount to start building their dream home quickly. Unlike a permanent loan, home construction loans are intended for the short term.

Home prices are rising faster than inflation across the country, meaning that even if you’re getting a loan today and planning on paying off your balance over time (as opposed to paying it off completely at once), you’ll still be paying more than you would have just two years ago.

As such, many people in Arkansas are now considering construction loans rather than traditional mortgages. Construction loans allow people to access the money they need to build their dream homes, an add-on to their current homes, or develop commercial properties, and construction loans come with a number of other great benefits as well. 

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Benefits of a new construction loan in Arkansas

When you’re looking for a new construction loan in Arkansas, you may wonder why it’s worth the extra effort. After all, most lenders offer conventional loans that can get you into your new house right away without having to wait for an entire new house to be built. But if you’ve been thinking about a new construction loan, there are some benefits that might make it worth the effort. 

First, you can customize your home exactly how you want it. When you have an Arkansas construction loan, you are free to add, remove, or otherwise change your plans before the project is completed so that the final product will be exactly the home you want. 

Second, construction loans are usually interest-only during the construction period. This gives you some flexibility to make the interest payments on the construction loan while still covering your current housing expenses, whether that’s rent or another mortgage, while you’re waiting for the project to be completed.

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4 Best construction loans in Arkansas

If you’re in the market to build a new home in Arkansas, consider these construction mortgage loans that are available to state residents.

1. Arvest Bank

Arvest Bank has more than 60 years of business in Arkansas and is one of the best known banks in the state. Not surprisingly, they offer construction loans to homeowners in Arkansas looking to build homes or purchase land. 

We asked Arvest Bank for more details on their construction loans and here are the key features and terms:

  • Fixed-rate loans
  • Interest-only payment
  • Finance construction, materials, home plans and/or land and lots
  • Finance up to 85% on loans conforming to secondary market standards
  • Finance up to 80% on jumbo loans 
  • Arvest services 99% of our mortgages, so you’ll continue to receive the same great Arvest service through the life of your mortgage.

When you’re ready to connect with a loan officer, use our form to quickly match with construction loan programs based on your specific circumstances.

2. CS Bank

CS Bank started over 100 years ago when the Bank of Eureka Springs was chartered. The bank has several locations throughout northwest Arkansas and Missouri. They also offer a construction loan product for people looking to build a home.

We asked CS Bank for more details on their construction loan product and here is what they said:

  • Construction loans are intermediate lines of credit where funds are advanced as construction on a home is completed.
  • Intended to provide short-term financing for the construction process, you can make interest-only payments to keep the build loan affordable.
  • Convert the line of credit balance to a long-term mortgage once construction is complete and your new home has a certificate of occupancy.

When you’re ready to connect with a loan officer, use our form to quickly match with construction loan programs based on your specific circumstances.

3. Wintrust Mortgage

Wintrust Mortgage is one of the top 20 bank-owned retail mortgage originators in the country that originates in excess of $4 billion in loans annually in all 50 states. 

Recently we asked Wintrust Mortgage to provide us with details on their construction loan and this is what they said:

  • One-Time Closing. Only pay the closing cost once
  • Lock in your rate upfront and avoid interest rate risk
  • FHA, VA, and Conventional options
  • 0% Down up to $822,375 (VA ONLY)
  • 3.5% Down up to FHA County Limits ($356,362-822,375) 
  • 10% Down on Second homes
  • FICO 680+
  • Loans must include building no Lot/Land Loans 
  • Maximum of 10-acres per build site
  • Stick Built and Modular Homes ONLY
  • NO log homes or metal homes (barndominium)
  • Tear Down and Rebuilds do qualify
  • No self-build or owner builders. The builder must be approved. 
  • Does Not allow ADUs (Accessory Dwelling Unit – Granny Flat/Garage Conversions/Basement)
  • Now lending in all 50 States

When you’re ready to connect with a loan officer, use our form to quickly match with construction loan programs based on your specific circumstances.

4. Signature Bank

Based in Arkansas, Signature Bank has experience with wealth management, personal and business banking products and, you guessed it, construction loans. Due to their local roots, they believe they can get you quick decisions with full personal service.

We asked Signature Bank for more details on their construction loans and here are the key features and terms:

  • Short-term loan option
  • Competitive interest rates
  • Loan secured by mortgage on the property
  • We help you to transition to long-term financing at completion
  • Commitment to personal service
  • Local decisions and processing

When you’re ready to connect with a loan officer, use our form to quickly match with construction loan programs based on your specific circumstances.

Does an Arkansas construction loan make sense for you?

You may have heard about construction loans but are not sure if you really need one. You may even be tempted to do the work yourself and avoid the cost of hiring professionals or paying interest on a loan. However, there are many reasons why you should consider getting a construction loan. Whether you want to purchase in Little Rock, Fayetteville, Fort Smith, or any other location in Arkansas, a construction loan has many benefits for you.

Construction loans are cheaper than doing it yourself. The cost of labor is higher than most people expect, and when you factor in the cost of materials, it can quickly add up to more than what you might pay for a construction loan.

You’ll have more flexibility with your funds. If something goes wrong or if there are unexpected changes in the project timeline, having access to cash will help keep things moving forward without having to wait for another paycheck or having to dip into your savings account or retirement fund. When you find the right professional to help you every step of the way, you’ll be able to move through the loan program application process easily.

You won’t have to go through the hassle of finding contractors on Craigslist who don’t have insurance or bonding liability protection in place should something go wrong during construction work being done on your property, like roofing replacement or foundation repair services, for example.

Depending on the residential construction loan lender you work with, your down payment might be lower than you expected compared with requirements from a mortgage lender. It pays to check out the best construction loan lenders first to confirm how your credit score will impact your loan rates and monthly payments.

So, if you want to build the home you’ve always dreamed of while saving thousands of dollars in the process, then an Arkansas construction loan might just be the perfect solution for you. Seek out experienced construction loan lenders and discuss loan rates and loan terms with them directly.

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Joshua Holt is a licensed mortgage loan originator (NMLS #2306824) and founder of Biglaw Investor. His mortgage expertise lies in the areas of professional mortgage loans, particularly for lawyers, doctors and other high-income professionals. Prior to Biglaw Investor, Josh practiced private equity mergers & acquisition law for one of the largest law firms in the country.

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