5 Best Construction Loans in Florida


Construction loans in Florida are available in a wide array of options depending on the lender you choose and your personal financial situation.

Population growth in Florida has been booming lately. According to recently released census data, Florida has seen its total population grow by 14.6% over the last decade, nearly double the growth rate of the United States.

The thousands of people streaming into Florida are putting pressure on housing prices. The Florida Realtors association reports that the statewide median sales price for single-family existing homes is $375,000, up 23% from the previous year.

With the increasing demand for real estate and rising prices across the state, many people have turned to construction loans to finance the building of new homes. If you’re going to spend a lot of money on a house, you might as well purchase a lot and build a custom dream home, right?

When someone decides to build a new dream home, one of the first things they start exploring are construction loans, which are a little different from conventional mortgages when you’re purchasing an existing home.

As you research, you’ll soon find that construction loans have different rules and qualifying criteria. The nightmare scenario to avoid is one where you’ve committed to purchasing a lot but end up struggling to find a construction loan.

Fortunately, there are loan officers that specialize in construction loans. They have years of experience working with underwriters to make sure you navigate the application, pre-approval, and closing process. 

If you’re a homebuyer 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 decision for you.

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Benefits of a new a construction loan in Florida

Construction loans are short-term financing that are used to cover the cost of building a house from start to finish. Construction loans can cover the costs of buying land, working with an architect to draft plans, permit fees, and the labor and materials necessary to complete the house.

Because construction loans aren’t secured by a completed house, the approval process for a borrower can be more complex than for a traditional mortgage. Your lender will likely want to be more involved in the process of understanding the construction timeline, budget, plans and your personal financial situation before approving the loan.

The other important thing to consider is that home construction loans aren’t distributed as a lump sum. Instead, your lender will distribute money to you through a series of installment payments as the states of the construction are completed.

The benefit of a construction loan is that you’ll typically only be required to pay the interest on the funds as they are drawn. You won’t need to make the principal payments until you complete construction. Your lender will probably have an option to convert your construction loan into a typical mortgage at the end of the construction process.

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5 Top Florida construction loans

1. Regions Bank

Regions Bank has a construction-to-permanent loan program for those looking to finance a new build.

We contacted Regions Bank to learn more about the program since the website hardly contains any information, and this is what we learned:

  • 10% down up to $1,000,000 loan amount
  • Loans available up to $2,000,000 loan mount
  • May use lot purchase as a downpayment
  • One-time close with interest rate locked before construction begins
  • Primary home OR secondary home
  • 700 Minimum Credit Score Requirement
  • Mobile, Manufactured, or Modular Homes are not eligible
  • Not Eligible for VA or FHA programs
  • No prepayment penalty

Unfortunately, owner builder projects and commercial/investment properties are not eligible for construction loans provided by Regions Bank in Florida.

2. TD Bank

The TD Bank construction loan has some great benefits if you’re looking to build a house, with down payments as low as 20% for a loan up to $1,500,000.

We contacted a loan officer at TD Bank to get the following details about the program:

  • 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.

TD Bank requires 10% of the construction costs to be held in reserve, but does let you use their loans for vacation properties, which is nice if you’re building something special in Florida.

3. Space Coast Credit Union

The folks over at Space Coast Credit Union offer a home construction loan up to $650,000, so long as you have a minimum credit score of 650.

We contacted Space Coast Credit Union to get more details about their program:

  • One Loan: from Construction through Final Permanent Mortgage
  • One Application, One Closing and One Paperwork Filing
  • Up to 90% Financing Available
  • We Make the Payments to Your Builder at Key Points Throughout the Process
  • Automatic Modification to Traditional Home Loan at the End of Construction
  • Fast Pre-approval Decisions, Online or Over the Phone
  • No Intangible Tax
  • SCCU Member Service for the Life of the Loan
  • SCCU Interest Rate Guarantee

As far as fees go, Space Coast Credit Union is advertising no application fees or pre-payment penalties. As of the time of publishing, they are charging $1,100 in origination fees.

4. MidFlorida

MidFlorida is a regional credit union based in Lakeland, Florida with a construction mortgage product.

MidFlorida will review and approve your builder before funding the loan and requires inspections prior to each draw.

Our research indicated that you can also expect to find the following terms with respect to their construction loan program:

  • Down payment as low as 10%
  • Financing is secured before construction begins. You only need to be approved once.
  • Interest-only payments during construction
  • One-step, one-time closing
  • Converts to a fixed- or adjustable-rate mortgage.
  • Flexible loan terms up to 30 years
  • Jumbo loans available

MidFlorida offers you the option of converting your construction loan into a conventional mortgage once construction is complete. There may be additional closing costs associated with that conversion since you’ll be establishing an escrow account for insurance and taxes, paying title insurance fees and possibly paying off any unpaid construction phase interest.

5. SeacoastBank

SeacoastBank is another option as they lend in Florida and have a construction loan product. Details are thin about the program, including the maximum amount available, but we were able to confirm the following details:

  • Adjustable Rate Mortgage options are available
  • Fixed Rate Mortgage options are available that would give you the same fixed rate from construction through permanent loan
  • One-time closing
  • Local underwriting and closing decision-makers during the loan process

SeacoastBank has a long history in Florida, tracing its roots back to 1926. Their primary areas of focus today are in Broward County through the Treasure Coast into Orlando and west to Tampa.

Does a Florida construction loan make sense for you?

Getting a construction loan in Florida comes with huge benefits and very little downside. You’ll likely be able to make interest only payments during the construction phase, which makes your monthly payment  affordable as an existing homeowner since you’ll be making mortgage payments on your current home until the new construction is complete.

The challenges of a construction loan in Florida are that you’ll find the process different from a typical mortgage, which is why we recommend working with a loan officer that specializes in construction loans. At the end of the day, you’re going to want someone who has extensive experience doing nothing but construction loans day in and day out.

If you’re looking to explore construction loans in other states, let us know and we’ll consider putting together a guide for your state.

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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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