Construction Loans in Kentucky

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5 Best Construction Loans in Kentucky

Key Terms

  • Construction loans in Kentucky can be obtained by both individuals and businesses for new construction, renovation, and remodeling projects.
  • Borrowers can use the loan funds for various purposes such as purchasing land, building materials, and paying for labor costs.
  • Kentucky construction loans typically have higher interest rates and stricter eligibility criteria compared to traditional home loans due to the higher risk associated with the construction process.

Kentucky is a state that’s hard to place in the history of the United States. It’s neither a southern state, nor a northern state. The lack of fitting into any particular region might explain why it is famous for its bourbon industry!

Either way, the real estate market is brisk in Kentucky these days. Last year the total sales volume crossed $14.3 billion, representing a growth of 16% according to the Kentucky Realtors Association. With rising housing prices and low levels of available houses, many people in Kentucky are turning to construction loans to build their dream homes instead of buying a house using a traditional mortgage loan.

There are also a number of other benefits associated with getting a Kentucky construction loan. So, let’s go over some of the benefits now so that you can determine whether or not a new construction loan might be the perfect solution for your needs. 

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Benefits of a new construction loan in Kentucky

Getting a new construction loan can be a great way to get the house you’ve always wanted. But what are the benefits?

The main benefit of getting a new construction loan is that it gives you time to make decisions about where you’d like to live, what style of home you want, and how much money you’ll need for the project. You can make these decisions without having to pay for anything upfront, and then once your house is complete, you’ll have an opportunity to make even more changes as needed!

Another benefit of getting a Kentucky construction loan is that it allows you to get started on your home right away. Rather than waiting for months or years for your home loan application to be approved, with this type of loan, everything will happen quickly so that you don’t have too much downtime between moving into your new home and starting the construction process.

Lastly, getting a new construction loan can help save money in the long run. If you’re looking for an affordable way to buy property near your current location while still maintaining some flexibility with regards to what kind of house you end up building (or improving), then this might be just what you need!

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5 Best construction loan lenders in Kentucky

If you’re planning to build a new home or renovate your existing property, here are the top construction loans in Kentucky. We’ve included ways to directly contact each program’s loan officer who specializes in construction loans.

1. Eclipse Bank

Eclipse Bank is a Louisville, Kentucky based lender that is focused on the Louisville area of the state. They offer a construction loan as part of their financial suite of products.

We reached out to Eclipse Bank to learn more about their construction loan program. Here are a few key details:

  • Available for primary residence or second home construction
  • Local processing
  • Payments are interest-only during construction phase
  • Payments are made on the amount drawn on your loan sufficient to pay your builder
  • Construction draws applied in stages based on work completed

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. 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 loan rate upfront and avoid interest rate risk
  • FHA, VA, and Conventional options
  • 0% Down payment up to $822,375 (VA ONLY)
  • 3.5% Down payment up to FHA County Limits ($356,362-822,375) 
  • 10% Down payment 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.

3. Paducah Bank

Paducah Bank is a local Kentucky bank in Louisville that serves the region with several financial products, including a construction loan.

We weren’t able to get a lot of information from Paducah Bank, but we still contacted them to see what we could learn about construction loans:

  • Competitive rates
  • Low closing costs (details not provided)
  • Convert construction loans to permanent financing

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. Cumberland Security Bank

Like many banks in Kentucky, Cumberland Security Bank is a regional bank serving the local community. They have a construction loan for those looking to build or renovate a home.

We contacted Cumberland Security Bank to learn more about their construction loan. Here are some highlights:

  • After you make draw requests to pay your builder, you will only have to pay the interest on the new balance. 
  • Once construction is complete, you will need a mortgage to pay off the construction loan and finance the debt over a period of time that works best for you.

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. Warsaw Federal

Warsaw Federal started in 1893 in Cincinnati, Ohio but now offers services in many locations throughout the country, including Indiana. They’ve been providing mortgages and refinancing for over 100 years, so naturally can assist with your construction product.

We corresponded with a loan officer at Warsaw Federal to learn more about their construction loan project and here is what we found:

  • Minimum 700 credit score required
  • 5% down up to $548,000
  • 10% down up to $900,000
  • 20% down up to $2,000,000
  • 25% down on Lot Loans
  • One-Time Closing! Loans convert to permanent loan at the end of construction
  • Construction periods of 8-12 months
  • 5/1, 7/1, 10/1 ARMs amortized over 30 years
  • Both stick-built and modular homes are eligible
  • No Self Builds must use an approved builder. 
  • The loan balance may be paid down until the final draw, reducing the mortgage amount and the monthly payment will be based on the new principal balance.

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 Kentucky construction loan make sense for you?

If you’re planning to build a new home, then a Kentucky construction loan might just be the perfect solution for your situation. Construction loans are designed to help borrowers pay for the expenses related to building a home, like buying land or hiring an architect.

The loan amount will depend on your credit score, debt to income ratio (how much debt you owe on credit cards and lines of credit versus your income) and other factors, but the most important thing is finding a loan type that fits into your budget.

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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