Construction Loans in Massachusetts

Construction loans in Massachusetts are a great way to finance the purchase of land, the construction of a home or a renovation project.

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5 Best Construction Loans in Massachusetts

Key Terms

  • A construction loan is a type of loan that provides funds for building or renovating a property, and it is typically short-term and involves a series of disbursements as the project progresses.
  • In Massachusetts, construction loans can be obtained from banks, credit unions, and private lenders, and the approval process generally requires a detailed plan for the project, including a budget, timeline, and building plans.
  • Borrowers in Massachusetts may choose from various types of construction loans, such as a construction-to-permanent loan, which combines the initial construction loan with a permanent mortgage once the project is complete, or a renovation loan, which provides funds specifically for home renovations or improvements.

Are you thinking of building a new house in Massachusetts? If so, you’re like many other people in New England’s most populous state. I hold a special place in my heart for Massachusetts, having lived there for five years, including during the Red Sox 2004 World Series title. With the current house construction boom, more people are looking to get construction loans in Massachusetts to build their dream homes versus a traditional home loan for a new home purchase.

The median price for single-family homes in Massachusetts reached an all-time high of $617,750 recently, according to the Massachusetts Realtors Association. With rising home prices—or if you simply want to build your own home—many people are considering the benefits of exiting the traditional buyer/seller real estate market and instead building something new.

Unfortunately, it can be somewhat scary to build a home, particularly if you’ve never done it before. Many people give up without realizing that there’s a whole industry available to help you complete the project. Construction loans are a great way to get a bank on your side, because now the bank has a vested interest in making sure the home is built correctly since the home is the asset securing the loan.

This guide will walk you through some of the best construction loans in Massachusetts to get you on the track to building your dream house.

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Top reasons to consider using a construction loan in Massachusetts

Flexibility. Compared to traditional mortgage loans, construction loans in Massachusetts offer more flexible terms, such as interest-only payments during home construction and a system of drawing the loan only as you need it as your project hits various checkpoints.

Transition to a permanent loan. Many lenders in Massachusetts offer products that let you transition a construction loan into a permanent mortgage at the end of the construction phase. In this arrangement, the builder receives the funding to construct the home while the borrower has adequate time to repay. When construction is complete, the loan takes up a mortgage-like model.

Bank is a partner in the construction process. Since the requirements of a new construction loan are more flexible, the lender pays attention to details of how you plan to accomplish your project. Scrutiny from a third party keeps you in check and motivates you to have a solid plan. To achieve this, you require up-to-date information on your contractor’s methods, materials, and time frames. 

Create your custom home. The best part of building your home is that you can get exactly what you want. When buying a home, buyers are inclined to choose a property close enough to their dream house. With a construction loan, you get to build your dream house. You are at liberty to choose favorable designs, materials, size, and all other construction factors.

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5 Best construction loans in Massachusetts

If you’re in the market for building a home in Massachusetts, consider these construction loan options that are available to state residents.

1. Middlesex Savings Bank

Middlesex Savings Bank is one of the largest mutually owned banks in the country. Without shareholders, the bank can focus on creating the best products in the market without worrying about shareholder profits. One of their products is a construction loan to help people in Massachusetts build new homes or renovate existing properties.

We reached out to Middlesex Savings Bank to learn more about their construction loan options and here is what we discovered:

  • Can be used for renovations to ground-up construction.
  • Short-term construction and permanent financing are rolled into one loan.
  • Loans available up to $2 million.
  • Fixed- and adjustable-rate options.
  • An experienced construction lender will guide you through the process from start to finish
  • Your loan will be serviced by Middlesex – not sold in the market.

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. GFA Federal Credit Union

GFA Federal Credit Union is a regional bank located in Massachusetts and New Hampshire that might make sense for your construction product.

We contacted GFA Federal Credit Union to learn more about their construction loan and while they were light on the details, we were able to gather the following:

  • Offer a construction to permanent loan product (once the home is built, the construction loan is converted into a mortgage with your certificate of occupancy).
  • Single application and closing
  • Interest only payments for first 12 months
  • More experts available to guide you through each stage of the construction process

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. Webster First Federal Credit Union

Webster First Federal Credit Union is a rather young bank by Massachusetts standards. Having only been in business for 90 years, they are a new kid on the block when it comes to lending. But, if you’re looking for a credit union to finance your construction loan, they are a good place to start.

We contacted Webster First Federal Credit Union to gather information about their construction loan. Here is what you need to know:

  • Rates are the same for either fixed-rate and adjustable-rate mortgages, based on your financing choice
  • Builds can take up to 12 months to complete
  • No pre-payment penalties
  • Optional additional payments to your principal balance during construction to reduce overall interest and term of loan
  • Your loan converts to a regular fixed rate or adjustable rate mortgage after construction is complete.

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. 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 (First Time Homebuyer), 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.

5. 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 loan amounts up to 1.5M
  • 30% down required on loan amounts 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.

Does a Massachusetts construction loan seem right for you?

Before making the big decision to take out a construction loan in Massachusetts, there are steps you can take to make sure you’re on the right path.

One thing we recommend is that you work with a loan officer at a bank that specializes in construction loans specifically. By exclusively focusing on construction loans, you know that those loan officers have successfully helped many homeowners build new homes, which is something you’ll want to help you manage the process.

How do you know which lender is your best pick? The easiest way to know for sure is to compare all of the lenders in Massachusetts offering construction loans and choose the one that feels like the best fit based on your interaction with the loan officer and where the loan details make sense for your personal situation. Some offer additional features like online banking and mobile banking, expedited processing if you have existing checking accounts or credit cards with them, home equity loans, and the ability to refinance.

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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