Nebraska is a great place to live and raise a family, but the cost of homeownership is rising. As such, many people are turning to construction loans as opposed to traditional mortgages.
The average home price for a single-family home in Nebraska is $200,000, but cities such as Lincoln, Omaha and Lexington clock higher prices according to recent reports. Meanwhile, the cost of building a home in Nebraska is closer to $90 to $130 per square foot for a standard grade construction per industry real estate experts in the state.
If you’re considering building a new home, a construction loan lets you build your dream home while making interest only payments during the construction period. It’s perfect if you want to make sure that you can afford the house before moving into it.
So, if you’re looking for a way to build a new house without taking out traditional home loans, continue reading to learn more about the advantages and disadvantages of building a new home as well as a list of construction financing lenders in Nebraska.
Benefits of a new construction loan in Nebraska
A new construction loan is a great way to get the home you’ve always wanted. It’s a loan that allows you to buy land and build a new house. The lender will give you money to pay for construction costs, and then once the house is complete, the lender will convert the construction loan into a traditional mortgage.
Another major benefit of home construction loans is that your lender will be aligned with your interest when it comes to ensuring that the builder completes the home on time and to the correct standards. The builder won’t want to risk damaging the relationship with the bank, meaning you’ll effectively have two parties (yourself and the bank) pushing the builder to get things done correctly.
Borrowers should always research down payment and credit score requirements from construction lenders before moving forward with a loan for their custom home.
5 Best construction loan lenders in Nebraska
If you’re ready to check out the top construction mortgage lenders in Nebraska, here are the best options we’ve found through our research.
1. West Gate Bank
West Gate Bank started in 1968 in Lincoln, Nebraska and now has over $560 million in total assets, all of which they claim are invested in Lincoln and Omaha communities. Not surprisingly, they offer a construction loan product for those in Nebraska wanting to build or renovate a home.
We recently contacted West Gate Bank to learn more about their construction loan. Here are some interesting highlights:
- Project management offered from from start to finish. The bank monitors the monthly construction draws, conducts on-site inspections, tracks lien waivers, and reconciles your project budget against the actual spend.
- Offers local service so you can call, email, or stop by our office any time.
- Will begin to process your construction draw immediately upon receiving it. Your build involves a lot of subcontractors and our goal is to get them paid as quickly as possible to keep your project moving.
- Offers customized lending solutions as a local bank with local underwriters.
- Applies to 15, 20 and 30-year mortgages
- Rate lock available for 3-9 months
- Available for Conventional Conforming Loans
- Relock your rate if interest rates improve
If you’re interested in connecting directly with a loan officer at West Gate Bank that specializes in construction loans, we can put you in touch with them directly.
2. First National Bank of Omaha
First National Bank of Omaha is based in Nebraska and serves the entire state when it comes to financial products like checking and investing accounts. In addition, they offer a construction loan for those interested in building in the state.
We reached out to First National Bank of Omaha to learn more about their construction loan product. Here are some key terms:
- Offers both construction loans and construction-to-permanent loans
- Interest rate protection available with extended lock option
- Financing up to 90% (i.e. 10% down)
If you’re interested in connecting directly with a loan officer at First National Bank of Omaha that specializes in construction loans, we can put you in touch with them directly.
3. Lincoln Federal Savings Bank
Lincoln Federal Savings Bank is a local bank in Nebraska formed in 1906 and organized as a mutual holding company. In that model the depositors of the bank own the company, meaning there are no outside shareholders. They operate solely in Nebraska.
We contacted Lincoln Federal Savings Bank recently to get more information about their construction loan program. Here are the details:
- Free Pre-Qualification. Know how much house you can afford to build before you start drawing up plans.
- Loan Product Flexibility. Contact a mortgage loan officer to learn more about our extended rate lock program, locking in your mortgage loan rate for 9 months during construction.
- Construction Process Navigation. Guided construction process from lot selection to permanent financing.
If you’re interested in connecting directly with a loan officer at Lincoln Federal Savings Bank that specializes in construction loans, we can put you in touch with them directly.
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, 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
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.
5. Union Bank & Trust Company
Union Bank & Trust Company is a family-owned local bank in Nebraska that offers banking, financial planning and wealth management services to the local community. Their history dates back to 1917, although they have a total of $6.5 billion in assets on hand today. As you might imagine, they offer a construction loan to community members looking to build.
We wanted to learn more about Union Bank & Trust Company and its construction loan, so we reached out to them to gather additional details.
- Your requests will typically be approved within 24 hours so you can begin your building project on time.
- Because we’re family-owned with local decision-makers, we provide prompt, timely communication to keep the process moving.
- We’ll typically process draws within 24 hours, helping to eliminate delays and keep subcontractors happy. Draws received before 10:00 a.m. are often processed the same day.
- Your project and needs are unique, and “cookie cutter” loans just don’t fit. We’ll listen to your needs and plans, then tailor a loan to suit you.
- Available for land/lot loans and renovations
If you’re interested in connecting directly with a loan officer at Union Bank & Trust Company that specializes in construction loans, we can put you in touch with them directly.
Does a Nebraska construction loan make sense for you?
Construction loans are a great way to get started on your dream home project without needing to liquidate any assets. They can also be used to cover the cost of the land purchase.
Keep in mind that you’ll need to continue to pay your rent/mortgage for your current home during the building process, so construction loans and building a new home can stretch the budget (even if you’re only making interest payments on the construction loan).
The process of building a home can take a long time but you’ll end up with exactly what you want.
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.
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.