Construction Loans in Connecticut

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6 Best Construction Loans in Connecticut

Key Terms

  • Connecticut’s construction loan marketplace includes a mix of local and national lenders, offering a range of loan options with different terms and requirements.
  • Borrowers seeking construction loans in Connecticut should have a strong credit score and financial history, as well as a solid construction plan and budget, to increase their chances of approval.
  • Connecticut construction loans typically have higher interest rates and require more documentation and information from borrowers compared to traditional home loans, but can be a good option for financing a new construction project.

Connecticut is a state in the New England region of the United States and shares borders with Rhode Island, Massachusetts, and Long Island. Connecticut is named for the Connecticut River, which runs through its middle from north to south. The Connecticut River also forms part of the border with New York, which also borders it on two other sides.

In 2022, Connecticut’s population was about 3.6 million people according to the World Population Review. The population of Connecticut has been increasing slightly every year since 2016, when it was 3.4 million people; however, this increase may be due to factors such as migration rather than natural growth.

The average price of a home in Connecticut in 2022 is $314,000 and housing prices continue to go up, according to CT Insider. It’s unclear whether housing prices will slow in the next few years. Borrowers seeking real estate in Connecticut are getting creative and looking for the right loan amount and location in this competitive market. Rather than waiting for the right home to hit the NMLS, some borrowers are looking for home construction mortgages instead.

Regardless, many people are turning to construction loans rather than getting traditional mortgages in Connecticut because they allow you to build your dream home while still paying off your mortgage over time. Plus, construction loans offer a number of benefits that simply aren’t available with traditional home mortgages. 

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Advantages to seeking a new construction loan in Connecticut

If you’re considering getting a new construction loan, you’re probably wondering about the benefits. The first thing to note is that there are different options available. For example, construction loans are available if you have an existing home and want to add on to it, or if you want a brand-new house built from the ground up.

One of the biggest benefits of a new construction loan is that they don’t require the large down payment associated with a traditional mortgage. This means that instead of having to come up with thousands or even tens of thousands of dollars in cash up front, as is typically required with traditional mortgages, you may be able to find options with low down payment.

A construction loan also gives you maximum flexibility to build your dream home according to your style and family needs. The only downside, however, is that you will need to pay for your current housing while the new home is being constructed, so construction loans can be out of reach for many people.

If you’re looking for construction loan lenders, make sure you seek out competitive rates as well as access to benefits like online banking and mobile banking for your construction project loan. Whether you’re a first-time homebuyer or an experienced purchaser, read through all disclaimers and disclosures to understand the specifics of your construction loan. With the right lender, you could end up with the home of your dreams.

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6 Best construction loan lenders in Connecticut

1. TD Bank

TD Bank is one of the largest banks in the country with over $600 billion in assets, making it the sixth-largest by deposits in the United States. Not surprisingly, TD Bank has a robust construction loan product and should be one that you consider before making your ultimate decision.

We reviewed the TD Bank website to learn more about the TD Bank construction loan program. Here are the details:

  • 720-740 FICO score desired
  • 20% down required on loans up to 1.5M
  • 30% down required on loans up to 3M
  • One-time close
  • Primary or secondary homes are eligible
  • Fixed rate and ARMs are available
  • Purchased lot considered in the down payment
  • No pre-payment penalties
  • Interest rate locked before construction begins
  • If land has been owned for at least 6 months, we will lend up to 80% of the appraised value of the entire project.
  • If land has not been owned for at least 6 months, we will lend up to 80% of the land acquisition cost+cost of construction
  • No Condos or Co-Ops. No investment properties.

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. Torrington Savings Bank

Torrington Savings Bank (TSB) is a Connecticut local bank in business since 1868. They can help residents of the state finance the construction of a new home or renovate an existing home.

We contacted TSB to get details about their construction loan and were surprised by the amount of information they provided. Here are the key terms you’ll want to consider:

  • Maximum loan limit is $647,200 (although they can potentially go higher depending on your credit history).
  • 10% down financing available
  • Available for purchasing land or lots
  • Construction to permanent loan with interest only payments during the build period with just one closing
  • 15, 20, or 30 fixed year term
  • Interest only during construction period
  • Inspection Fees – $175.00 per inspection
  • Property insurance is required.
  • Builders risk insurance required.
  • Must have general contractor.
  • Flood insurance may be required.
  • 60 day commitment. Any change of loan after commitment issued – $400.00 fee.
  • Application fee ranges from $728.59 to $755.87 on single family, existing, owner occupied properties. Application fee includes cost of appraisal and credit reports.
  • No Prepayment Penalty.

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. Dime Bank

Dime Bank has a history in Connecticut that reaches back to 1869 when the Connecticut Legislature approved the charter. Originally, the bank required a minimum opening deposit of 10 cents! Times have certainly changed but the bank has a long history of working with people in Connecticut.

If you’re interested in a construction loan, Dime Bank can finance the build of your home in Connecticut. Here are some of the features of their construction loan product:

  • Primary residences
  • Home improvement loans available
  • Local customized solution tailored for your needs
  • Also available in Rhode Island

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. Jewett City Savings Bank

Jewett City Savings Bank is a small bank in Connecticut located in Jewett City. If you’re looking for a local option to finance your construction loan in Connecticut, they might be a good fit.

We reached out to Jewett City Savings Bank to learn more about their construction and land/lot loans. Here is what we found:

  • Land/lot loans available
  • Primary homes and investment properties
  • Can acquire land even if you’re not ready to build immediately
  • Finance the purchase of the building lot, construction, and your permanent mortgage in a single loan.

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.

5. Windsor Federal Savings

Windsor Federal Savings is a small bank in Connecticut located in Windsor. They have several branches around the state of Connecticut and have a construction loan that is available to help finance the building of a new house.

We contacted Windsor Federal Savings to learn more about the construction loan terms and features. Here are a few of the details:

  • Construction loans with permanent financing and only one closing
  • Interest rates may be locked at application
  • Interest only payments during the construction period
  • Up to 12 month construction period.

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.

6. 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.

Does a Connecticut construction loan make sense for you?

If you’re planning to build a new home or have recently purchased a piece of land and need to construct a home on it, it may be time for you to consider a construction loan. Construction loans are typically taken out by individuals who need financing for their projects but aren’t able to get the money from traditional lenders.

Construction loans are generally easier to obtain than commercial loans because they don’t require as much collateral. However, the interest rates tend to be higher than those of traditional mortgages, at least in the short term. 

The best way to determine whether or not a construction loan makes sense for you is to understand how much money you’ll need and what type of property you’ll be building on. If your project is small enough that you can finance it with personal savings or cash on hand, then a construction loan probably isn’t necessary. 

However, if your project is large-scale (such as building an apartment complex) and requires significant upfront capital investment in order to complete it, then taking out a construction loan might be beneficial in terms of lowering your overall cost of ownership over time.

Looking for a construction loan in a different state?

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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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