Construction Loans in Mississippi

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5 Best Construction Loans in Mississippi

Key Terms

  • Mississippi construction loans typically have lower loan-to-value ratios compared to other types of loans, which means borrowers may need to come up with a larger down payment to qualify for financing.
  • The interest rates on Mississippi construction loans are typically higher than those on traditional mortgages, and the terms are often shorter as well, with the loan being due within 12-24 months.
  • To qualify for a Mississippi construction loan, borrowers generally need to have a strong credit score, a solid financial history, and a detailed plan for the construction project, including a budget and timeline.

Mississippi is known for its humid climate and connection to the Mississippi River which flows along and defines its western border. With so much land available, Mississippi was always a stopping ground for pioneers looking to build homes. Despite recent population growth in other states, Mississippi saw a slight decline over the past decade, losing 0.4% of its population according to U.S. Census data.

That hasn’t stopped people clamoring to build their dream homes on any one of the 46,923 square miles in the state. Many people turn to construction loans to help them complete the project. When you’re getting a new construction loan in Mississippi, it’s essential to compare the best construction loans available in the state. This way, you can see what loan rates each lender offers and find the right one for you.

Another popular reason for building new homes in Mississippi is a long-held belief, backed up by a recent study, that buying is cheaper than renting in the state. The study found that the average monthly rent in the state was $1,039 compared to monthly mortgage payments of $886. Of course, you’ll need to factor in the extra costs associated with home ownership to make sure the decision is right for you.

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The types of construction loans available in Mississippi

There are four basic types of construction loans:

Construction-to-permanent loan

Construction-to-permanent loans are an excellent choice for first-time borrowers, as they allow you to build property equity more quickly and will enable you to convert your loan into a permanent mortgage once the construction is complete.

They typically have lower costs than conventional loans because they don’t require as many inspections or appraisals during construction.

The most significant benefit of this loan program is that it can help give homeowners equity faster than other loan types.

Suppose you sell your property within five years after closing on your construction-to-permanent loan. In that case, there’s no penalty for canceling the original contract or breaking it into smaller chunks (i.e., selling off parts of the house).

Construction-only loan

A construction-only loan is a short-term loan that provides financing for the building of a home. It does not include any funds for furniture, fixtures, or other items necessary for occupancy.

This loan only finances the construction cost. It does not fund other costs such as lot purchase, land clearing, or site preparation.

The interest rate will be higher than a standard mortgage, but you don’t have to worry about paying back any debt while working on the house.

Owner-builder loan

Owner-builder construction loans are for homebuyers who plan to do some work themselves. This type of loan is ideal for you if you want to save on costs by doing the labor yourself or to retain a portion of your home’s equity to build additional equity as its value increases over time.

Owner-builder loans tend not to be short-term (one year or less), which means they’d last longer than other types of mortgage loans. That gives homeowners more flexibility in terms of what they can do with their repayment schedule—for example, making extra monthly payments so that they’re debt-free sooner rather than later!

Renovation loan

A renovation loan is a type of home loan used to pay for improvements to a property. You can use this loan to pay for improvements that the homeowner will live in or rent out as an investment property. The purpose of these renovations determines the loan amount the homeowner can borrow.

For example, if you want to buy a home and renovate it before moving in, you could use renovation financing for this purpose since it’s an improvement you will use yourself.

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4 best construction loans in Mississippi

1. BankFirst

BankFirst is a community bank located in Alabama and Mississippi that has a robust construction loan product. If you’re interested in working with someone local, and you find the terms appealing, they could be a good fit for you.

Recently we asked Bank First to provide us with the details on their construction loan. Here’s the overview:

  • Available for primary residence or second home construction
  • Competitively low rates for your home construction project
  • Payments are interest-only during the construction phase
  • Construction draws applied in stages based on work completed
  • Local decision-making, underwriting and processing

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. Mutual Credit Union

If you’re interested in working with a credit union in Mississippi, we found a construction loan product at Mutual Credit Union with attractive terms, including up to 80% financing.

Here is the overview of the construction loan product provided by Mutual Credit Union according to the details they provided.

  • Competitively low rates for land or construction purchase or refinancing
  • Up to 15 years for land purchase and refinance
  • Up to 9 months for construction
  • Up to 80% financing of appraised value for qualified buyers
  • Loan advisors with working knowledge of the local real estate 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.

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 payment 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.

4. PriorityOne

There are plenty of construction loan lenders in Mississippi and PriorityOne is another that can help you build a home in the state.

The construction loan offered by PriorityOne seems typical of the market in Mississippi but may offer competitive rates, so it’s worth checking as part of your due diligence.

  • Competitive rates for your home construction project
  • Cash advances as needed; only pay interest on advanced funds
  • Phase-based structure designed to save you money
  • Temporary, short-term loan
  • Option to roll into full mortgage at end of construction
  • One-time closing helps you save on closing costs
  • Local decision-making and processing

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.

Factors to consider when getting a construction loan in Mississippi

The following are some factors to consider when getting a construction loan in Mississippi:

Interest Rate

The interest rate is crucial when deciding on a construction loan. Looking at your credit score, home equity, and income before deciding on an interest rate for your construction loan is essential.

You also want to know if there will be any fees or penalties if you pay off your loan early and close it before the term ends.

Credit Score

A good credit score can help lower the interest rate on your construction loan, but bad credit may increase it or even prevent you from obtaining one altogether!

If you have poor credit, work with a lender who understands what they’re doing and won’t take advantage of people by charging higher rates than necessary just because they need help paying their bills each month (which could happen).

Home Equity/Equity Line of Credit (HELOC)

Before applying for any construction loan, check whether or not there is enough equity available in your home so lenders can finance 100% of what needs replacing right away. Then, you won’t have to worry about finding other sources later down the line (like lines from private investors).

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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