5 Best Construction Loans in Iowa


Construction loans in Iowa are available to homeowners looking to renovate existing properties or people who want to purchase land and build a new home.

Nobody is completely sure why Iowa is known as the Hawkeye State but legend has that it’s related to Native American warriors. It’s also home to more than three million people and has a population that’s growing every year. The state features some of the best farmland in the country, which contributes to its agricultural economy being one of the largest in the nation.

The median price of a home in Iowa is $195,000 according to the Iowa Association of Realtors. So, while home prices are rising in Iowa, they’re still affordable compared to many other states in the country. This makes it easier for first-time buyers to get their foot in the door, and it also makes it possible for them to get construction loans if they want to build something new.

When you build a home using a construction loan, instead of getting a traditional mortgage loan, your monthly payments are lower during those months when your house isn’t finished yet (because you’ll likely only be paying interest).

Let’s briefly go over some of the other benefits and disadvantages of construction loans in Iowa.

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Benefits of a new construction loan in Iowa

New construction loans are a great way to get a mortgage for your home, even if you don’t have an existing house. You can use it for a house that’s being built from scratch or for any other type of construction project.

There are lots of benefits to getting a construction loan, including being able to finance the construction of a new home while you’re still living in your existing home. That allows you to move into your new house as soon as it’s finished being built without having to worry about selling your existing home first.

Also, with a construction loan you don’t have to worry about competing with other buyers on the real estate market; you can just negotiate directly with the builder or developer who will be constructing your home. This means that you have more control over what happens during the construction phase, like what kind of upgrades or changes you want made and when they’ll happen.

Finally, if there’s something wrong with your home once it’s completed, you can benefit from having a lender in the loan process with you because they’ll be able to work directly with the developer to make sure the house is completed correctly. After all, the bank has just as much interest in making sure the house is valuable as you do and if a bank doesn’t want to work with a specific builder it can have a negative impact on the builder’s business.

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5 Best construction loan lenders in Iowa

1. State Savings Bank

State Savings Bank is a Baxter and Des Moines, Iowa bank with personal, business, agriculture and home mortgage banking products. They serve the central Iowa area and offer construction and land loans as part of their mortgage division.

We contacted State Savings Bank to learn more about their construction loan and found a lot of details worth reporting:

  • Pay a loan origination fee, a down payment, and other applicable fees.
  • Loan repayment is interest-only based on the amount of money advanced.
  • Allowable construction loan amount is determined by the cost of construction and the home’s appraised value.
  • Home value is determined by a certified appraiser based on the house plans and specs you and/or your builder provide.
  • Loan advances on a construction loan can be made up to twice a month.
  • Construction loan interest rate can be locked in prior to the completion of your home.
  • Upon completion of construction, a final appraisal determines the value of your completed home.
  • You can move in as soon as the city issues an occupancy permit, regardless of whether your permanent loan has closed.

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

2. Lincoln Savings Bank

Lincoln Savings Bank is a local community bank in Iowa owned and managed by Iowans. Like many banks in the country, Lincoln has a long history of working with consumers and businesses in the state, opening up its doors in 1902. As part of many financial products, they also have a construction loan.

We contacted Lincoln Savings Bank to learn more about their construction loan product. Here are the key terms:

  • Finance the cost of land, construction materials and labor.
  • Use funds for remodeling and additions, as well as new construction.
  • Short-term, fixed-rate loans.
  • Interest-only payments during the building process.
  • Local lending professionals to walk you through the building process from beginning to end.
  • Easily convert short-term loan to traditional mortgage.

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

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+ credit score
  • 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

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.

4. Peoples Bank

Peoples Bank serves northwestern Iowa and has been in business serving individuals and companies since 1945. The bank offers construction loans to those in Iowa looking to build a new property, including financing the purchase of land.

We reached to People Banks in Iowa to discuss their construction loan and here is what we learned:

  • Personal construction loans offer short-term financing for the costs associated with building a new home.
  • You can also use a home construction loan to make improvements or add an addition to an existing structure.
  • Construction loan terms may vary depending on the project, but the average is one year.
  • Once the work is completed, Peoples Bank will convert your construction loan into permanent financing.
  • Interest-only payments make it affordable to build your dream home.
  • Competitive rates and flexible terms.
  • Borrow only as much as you need.
  • Interest accrues only on what you borrow.

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

5. Collins Community Credit Union

Collins Community Credit Union was started in 1940 by ten Collins Radio employees and has since grown to the fourth largest credit union in the state of Iowa with more than $1 billon in assets. In addition to offering standard financial products like checking and savings accounts, they can also help with a construction loan to finance the building of a new home.

To learn more about Collins Community Credit Union and the construction loan rates they offer, we reached out to them to get additional information:

  • A construction loan is a short-term loan to fund the construction of your new home. 
  • During construction, you make interest-only payments to the Credit Union on the outstanding balance of the construction loan until the home is complete. 
  • Once construction is completed, your construction loan can then be refinanced into a long-term mortgage.
  • Extended rate lock option lets you lock your long-term mortgage during construction, protecting you from rising rates.
  • As little as 5% downpayment depending on credit approval.
  • One time float down rate option.

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

Does an Iowa construction loan make sense for you?

If you’re planning to build a new home, or if you’re looking to renovate your existing home, then a construction loan could be a smart option.

A construction loan is usually provided by a bank or other financial institution, and it allows the borrower to take out funds that they can use on various aspects of the project. Construction loans have become increasingly popular over the years as many people have realized that building a home to their specifications can be superior to purchasing an existing home on the market.

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

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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