5 Best Construction Loans in California


Construction loans in California are available in a many different options depending on the lender you choose.

Although California lost a portion of its population in 2021, new home construction continues to expand. According to U.S. housing data, 119,436 new housing units were authorized in California in 2021, with 65,890 or 55.2% of the units being single-family homes. 

In California, a shortage in available homes for sale and soaring rents have pushed home prices to all-time highs. Many families looking to buy their first home have turned to new home construction instead of trying their luck in a bidding war, given average purchase prices around $884,000 according to the California Association of Realtors. To finance these construction projects, Californians are turning to a construction loan to help build their dream home.

When someone decides to build a new dream home, they first start exploring which financing option allows them to build more of a house. Because a construction loan is a little different from conventional mortgages, it’s important to find a construction loan officer who is familiar with new home construction financing. You want someone who is battle-tested and has been through the experience of building a home rather than a loan officer who only has experience financing the purchase of existing homes.

Fortunately, in California, many banks specialize in construction loans. Many of these banks employ loan officers with years of expertise funding specialized construction projects and can help borrowers navigate the application, qualification, and construction loan process. 

If you’re a homebuyer or home builder looking for a construction loan specialist, we can quickly connect you with several options customized to your specific needs so that you can make the best real estate decision for you.

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Top reasons to pursue a new construction loan in California

One of the biggest advantages of construction loans is that they can be used to finance the purchase of a property, as well as the construction costs associated with that property. This can provide a significant financial advantage to buyers who might not otherwise be able to afford the total cost of the purchase and construction, especially in California.

Another advantage of construction loans is that they can be used to finance renovations or improvements to an existing property. This can be a great way to add value to a property without having to take out a traditional mortgage.

If you are considering a construction project in California, be sure to talk to an experienced construction lender about the possibility of taking out a construction loan.

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5 best construction lenders in California

1. California Bank and Trust

We found the California Bank and Trust construction loan product specifically interesting because it allows you up to 24 months of construction time, which means that you won’t have to worry about delays in a construction timeline. There are also many other interesting aspects about their program, including financing up to $6,000,000.

We reached out directly to a loan officer at California Bank and Trust to get specific details about their construction loan and here’s what we found:

  • 700 credit score required
  • 20% down up to $2,400,000
  • 25% down up to $3,600,000
  • 30% down up to $4,800,000
  • Loans up to $6,000,000 are available
  • Major renovation loans are available 
  • Up to 24-month construction term followed by a 30-year ARM of your choice (3/1, 5/1, 7/1, & 10/1)
  • Rate protection with one qualification, one appraisal, and only one set of fees/costs
  • Fund control oversight and project progress completion monitoring with reports detailing loan disbursements for your records
  • Competitive loan rates
  • Interest-only payments during the construction phase

If you want to connect with a loan officer at California Bank and Trust that specializes in construction loans, we can put you in touch directly.

2. 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, including California. 

Recently we asked Wintrust Mortgage to provide us with details on their California construction loan product 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 Downs 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

If you’re interested in connecting directly with a loan officer at Wintrust Mortgage that specializes in construction loans, we can put you in touch with them directly.

3. Pacific Premier Bank

Pacific Premier Bank is a California specific construction loan lender that has several loan types worth considering if you’re rate shopping other lenders and trying to find the best deal for you.

We reached out directly to Pacific Premier Bank to learn more about their construction loan and here are the details:

  • Customized loan programs and competitive rates as you build from the ground up. 
  • Residential for sale and speculative projects
  • Non-Owner Occupied Single Family (1-4) Construction
  • Owner-User (Industrial and Retail)
  • Non-Owner-User (Multi-Family, Commercial, Industrial and Retail)
  • Primary market area is California
  • Full service appraisal and environmental services provided by in house team
  • Internal Fund Control services provide progress inspections and periodic year-end reporting

If you’re interested in connecting directly with a loan officer at Pacific Premier Bank that specializes in construction loans, we can put you in touch with them directly.

4. US Bank

US Bank is a large lender with a solid construction loan option. They can’t work with owner-builders, investment property, or manufactured homes, but if you fall outside of that category (e.g. a primary residence or a second home), then you may like the options.

We reached out directly to US Bank to get details on their California construction loan program and this is what we heard back:

  • 720 credit score required
  • 10% down up to $750,000
  • 20% down up to $1.5 million 
  • 25% down up to $2 million
  • Loans up to $10 million are available 
  • Primary residence and Second homes only
  • May use lot purchase as a down payment
  • Major renovation loans are available
  • 12-24 month Build periods are available 
  • 30 year fixed One-Time-Close or ARM (5/1, 7/1 & 10/1)
  • One-time closing automatically converts to permanent financing at the end of construction
  • Interest-only payments during construction
  • No prepayment penalty
  • No Spec or Investment Builds
  • No Pre Starts

If you’re interested in connecting directly with a loan officer at US Bank that specializes in construction loans, we can put you in touch with them directly.

5. North California National Bank

Northern California National Bank is a community bank in northern California with a comprehensive construction loan. If you’re interested in working with a community bank with local decision banking, this bank could be a good fit for you.

We contacted Northern California National Bank directly to learn more about their construction loan. Here are the highlights:

  • Home construction loans are made for a limited duration, typically no more than a year.
  • Interest only financing for the term of the loan.
  • During construction, the bank works with your contractor to fund the project through pre-determined draw payments, which are designed to ensure that distinct portions of the project are completed before any additional funds are released for later phases.
  • The advance rate and loan amount will be determined based on the project cost and equity required. In certain cases, the cash equity required may be reduced by equity in the land.

If you’re interested in connecting directly with a loan officer at Northern California National Bank that specializes in construction loans, we can put you in touch with them directly.

Does a California construction loan make sense for you?

There are many factors to consider when deciding if a construction loan is the right choice for financing your new home. One of the most important is the amount of equity you have in the property. If you own the land outright or have a large down payment, you may be able to finance the construction of your home with a conventional mortgage. However, if you don’t have a lot of equity or meet downpayment requirements, a construction loan may be the only option.

Another factor to consider is the interest rate. Construction loans typically have higher interest rates than mortgage loans, so you’ll need to factor that into your budget. The good news is that the interest is usually only charged during the construction phase, so once your home is completed, you can refinance into a conventional mortgage with a lower interest rate.

Another thing to keep in mind is that construction loans are usually short-term loans, so you’ll need to have a plan in place for how to pay off the loan once construction is complete. One option is to sell the home and pay off the loan with the proceeds. Another option is to refinance into a conventional mortgage.

If you’re looking to explore construction loans in other states, check out our national guide to construction loans and get started exploring all 50 states.

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Joshua Holt

Josh’s blog has become my one-stop shop for the latest in financial news, strategies, and tactics. There are plenty of other finance and investing sites, but nothing so squarely targeted at lawyers. If you’re a lawyer who wants to better understand your finances and the markets, it’s a must read! —Keith Lee

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