4 Best Construction Loans in North Dakota

North Dakota effortlessly combines urban vibrancy with rural charm, highlighted by bustling cities such as Bismarck and Fargo, the latter famously depicted in the Coen brothers’ film. With a population exceeding 757,000, this Midwest gem also features thriving urban centers like Minot, attracting a steadily growing community.

In those urban areas, housing prices are higher than you might expect. According to Shawn Ostlie, President of the North Dakota Association of Realtors, the average sales price in the Fargo area is about $275,000. Homes in rural areas tend to cost less than those in cities or suburbs; however, this varies depending on how close they are to urban centers like Grand Forks or Bismarck.

Sometimes homebuyers are arriving from other states like Minnesota or South Dakota but are searching for the perfect piece of real estate in the NMLS in North Dakota. Some of these buyers have run calculators to see if they can get the loan rates and loan type they desire after going through underwriting on a conventional home loan, but for some this just isn’t the right option. If you’re seeking a new home and don’t want to go through a VA loan or traditional mortgage lender, you can make your property just how you want it with a customization loan.

Borrowers who don’t want to go through a mortgage loan program with traditional requirements to get approved for their loan amount might have to get creative over financing. Getting the loan amount covered under a construction loan is one option available to you. While the vast majority of the marketing focuses on things like refinance options and typical home loans, a construction loan sometimes makes more sense than a conventional loan.

In recent years many people have turned away from traditional mortgages and toward construction loans when building homes in North Dakota because they would rather build their dream home than negotiate with sellers in a hot market.

If you’ve considered building or renovating a home in North Dakota, read on to learn more about the benefits of construction loans and whether one makes sense for you. 

Benefits of a new construction loan in North Dakota

New construction loans are great for a number of reasons. First of all, they allow you to secure the funds up front and built the property over time (usually up to 12 months but construction timelines will vary by lenders).

Second, you know exactly how much money you’ll need to pay back every month, and that’s not just because the bank will tell you what the monthly payments will be before you sign up. It’s because you’ve already done the math and figured out how much it will cost to build your dream home.

Third, you’ll only need to pay interest on the construction loan during construction. At the end of the construction project the loan will convert into a traditional mortgage with principal and interest payments.

Finally, with a new construction loan, your bank will act as a partner with you since they have a vested interest in making sure the home is constructed property and on time.

4 top construction loan lenders in North Dakota

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

1. Starion Bank

Starion Bank is located in North Dakota and Wisconsin. They offer a wide range of financial services, from checking accounts to mortgage to insurance services. Specifically, they offer a construction loan product if you’re considering building or renovating a home.

We were interested in learning more about Starion Bank’s construction loan, so we contacted them to get the following details:

• Short-term loan that covers building materials and labor
• Affordable rates and low closing costs
• Down payment as low as 5%
• Access to loan professionals who can help you navigate all phases of the building process
• Easy transition to permanent mortgage. They’ll waive the origination fee for the permanent financing if you’ve financed the construction loan with them.

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. US 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

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. First Community Credit Union

First Community Credit Union is a credit union located throughout North Dakota with a long history of serving the residents of the state. If you’re looking for a credit union to finance your construction project, they could be a good choice.

We contacted First Community Credit Union to learn more about their construction loan and here is what they said:

• Available for primary residence or second home construction
• Can roll into permanent mortgage at end of construction
• 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
• Quick, 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.

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

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 North Dakota construction loan make sense for you?

If you’re looking to get a loan for a construction project, there are some things to consider before you make the decision.

First, it’s important to understand exactly how much money you need. The best way to figure out how much money you’ll need is to work with an architect and a builder to figure out the total cost of the project. This way, when you talk with lenders about the loan application process, they can help you determine an accurate amount of money that you’ll need from them.

Another thing that may affect whether or not a construction loan makes sense for you is if you can afford to make interest payments on the construction loan while covering the carrying costs of your current rent or mortgage. If you can’t, building a property may not be a good idea at this time.

Looking for a construction loan in a different state?

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