5 Best Construction Loans in New Mexico


Are you looking to build or renovate your home in Mew Mexico but don’t have sufficient funds? Perhaps it is time to consider construction loans.

New Mexico is a beautiful state with a rich history and exciting future. With over two million people and lots of land, New Mexico is a popular state to build a new home, whether it’s a primary residence or a vacation property.

Average sales prices for existing homes in New Mexico is currently $374,571 according to the New Mexico Realtors Association. Meanwhile, local real estate experts are reporting that the cost to build a home in New Mexico is around $110 to $120 per square foot..

Many people are turning to construction loans to finance the building of a new home (or renovating an existing property), rather than getting involved in negotiations between buyers and sellers in the traditional housing market. After all, with a new home you are only negotiating with your spouse as to the details of the house! Borrowers finding the perfect space on the NMLS are looking for alternative options beyond a conventional loan to build their dream home, and a construction loan may be the ideal solution.

When seeking a single-family permanent mortgage loan or refinancing, you don’t get all the same benefits as going forward with new construction loan. Instead, you can use your construction home loan amount to create exactly what you had in mind.

Let’s go over some of the other benefits you can find when you take out a construction loan in New Mexico. 

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Advantages of a construction loan in New Mexico

If you decide to finance your home-building project with a loan, there are many benefits that come with getting a construction loan.

While qualifying for a construction loan can be more challenging than a traditional mortgage because the collateral hasn’t yet been built, when you partner with a lender to build a new home, the bank is incentivized to make sure the home is constructed correctly. They have just as much of a vested interest in seeing the project through as you do, which makes the lender a reliable partner.

Plus, a construction loan typically only requires interest-only payments during the construction phase. While you’ll still be paying your existing rent or mortgage, knowing that you only need to cover the interest during the home building process will make it easier to get the projected completed.

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5 Best construction loan lenders in New Mexico

If you’re ready to check out the top construction mortgage lenders in New Mexico, here are the best options we’ve found through our research.

1. Washington Federal Bank

Washington Federal Bank (WaFd) is a regional bank but has offices throughout the southwest and northwest covering eight states. Based in Washington, they also lend in Idaho and have a construction loan product worth exploring.

We reached out to someone in the Idaho office of WaFd to learn more about their construction loan and here is what they said:

  • Payments quoted may include estimates of taxes & insurance, so actual payments may be higher.
  • Loans are subject to credit approval.
  • Rates for owner occupied homes only.
  • We handle all draws and inspections during construction.
  • All-in-One Construction to Permanent Loan, construction and permanent financing are conveniently rolled into one loan, so the permanent interest rate is locked in before you break ground.
  • Has a cross-collateral loan program, where you may be able to wait to sell your current home until after you move into your new home.

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

2. Sandia Laboratory Federal Credit Union

Sandia Laboratory Federal Credit Union serves the high-tech and professional community in Albuquerque and surrounding areas. With over 115,000 members and $3.1 billion in assets, this is a large credit union with lots of financial products, including construction loans.

We reached out to Sandia Laboratory Federal Credit Union to learn more about their construction loan and here are some highlights:

  • Construction loans have a 12-month construction period with interest-only payments while you’re building.
  • Vacant land loans available with 12 year terms, 75% loan-to-value, and no points.

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

3. U.S. Bank

US Bank is a large lender with a solid construction loan option. They can’t work with owner-builders, investment property, or manufactured homes, but if you fall outside of that category (e.g. a primary residence or a second home), then you may like the options.

We reached out directly to US Bank to get details on their program and this is what we heard back:

  • 720 credit score required
  • 10% down up to $750,000
  • 20% down up to $1.5 million 
  • 25% down up to $2 million
  • Loans up to $10 million are available 
  • Primary residence and Second homes only
  • May use lot purchase as a down payment
  • Major renovation loans are available
  • 12-24 month Build periods are available 
  • 30 year fixed One-Time-Close or ARM (5/1, 7/1 & 10/1)
  • One-time closing automatically converts to permanent financing at the end of construction
  • Interest-only payments during construction
  • No prepayment penalty
  • No Spec or Investment Builds
  • No Pre Starts

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

4. Pioneer Bank

Pioneer Bank opened its doors on February 18, 1901 in Roswell, New Mexico to finance home constructions. They’ve since grown into southern New Mexico’s number one community-based bank for business and personal banking with over $700 million in assets. 

We specifically wanted to learn more about Pioneer Bank and its construction loan, so we reached out and gathered the following information:

  • Local decisions and greater flexibility on quick loan decisions
  • Duration of usually 1 year
  • Construction financing refinances to a permanent mortgage when construction is complete
  • Interest-only payments during construction
  • No prepayment penalties
  • Available for primary or vacation residence, or to make significant renovations to your existing home.
  • Available for land/lot purchases and finance the construction

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

5. 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.

Does a New Mexico construction loan make sense for you?

A construction loan is a short-term loan that you can use to get your project started. If you’re building a home, remodeling, or upgrading your office, it might just be the right choice for you.

When you use a construction loan to finance your project, you don’t have to wait until all of the work is complete before getting access to funds. As soon as the contractor signs off on certain phases of construction, or as soon as they finish specific tasks like laying the foundation or framing, you can draw money from the bank account (typically after the bank has inspected the work). This makes it easy to manage cash flow and pay contractors who need to be paid on time in order to keep working on schedule.

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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