5 Best Construction Loans in Pennsylvania


Construction loans in Pennsylvania are great options if you’re looking to build a new home, renovate an existing home or purchase land.

Pennsylvania is the Keystone State and officially a commonwealth (one of four in the country). It’s the fifth-most populous state in the country and only the 33rd-largest state by area, which means the population density in Pennsylvania is quite high (even outside of the Philadelphia and Pittsburgh areas).

The median sales price is currently $211,192 in the state according to the Pennsylvania Association of Realtors. Many home buyers are turning to construction loans to finance new builds given the historically low real estate inventory.

If building your dream home is something that you’ve been considering, this article will walk you through the pros and cons of taking out a construction loan, as well as give you a list of possible lenders and their financing options based on our research.

Whatever your decision, if you decide to move forward with a construction loan, you will want to make sure you are working with a loan officer at the bank that is familiar and has experience with construction projects. As you will see, construction loans are a little different from your traditional home loans.

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Benefits of a getting a construction loan in Pennsylvania  

Construction loans are essential for new home builders and those in the market to renovate an existing house. The benefits of getting a construction loan include: 

Secure funding once. Once you’ve found a lender for your construction loan project, you will likely only need to secure financing once for the entire project. Rather than having to finance each stage of the project, the bank will approve your entire loan at the beginning and allow you to draw installments from the loan during each phase of construction.

More control. When you build your own home, you get to control the decision-making, meaning the new home will be completely customized to your family’s needs. You’ll be able to decide the number of rooms, the square footage, etc. and of course all the furnishings that will complete your house.

Build and buy the land. This means that you can go to one lender and get the money you need to finance both the purchase of the land and the construction of your new home. This can be a real-time-saver since you don’t have to go through the process of applying for two different loans.

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5 Best Pennsylvania construction loan lenders

If you’re in the market to build a home in Pennsylvania, consider these construction mortgage loans that are available to state residents.

1. Fulton Mortgage Company

Fulton Mortgage Company specializes in mortgage loans and has extensive experience in construction loans specifically, although their upper loan limits may not work for some people in New Jersey looking to build houses.

We are in touch with several loan officers at Fulton Bank who specialize in construction loans and here are the details they provided on their construction loan options:

  • 10% Down Required (Owned Lot may be counted towards requirement)
  • Lot and Construction at the same time
  • One time close with rate modification at the end
  • Up to $1,500,000 at 80% Loan To Value
  • Up to $850,000 at 95% Loan To Value
  • Interest-only during construction
  • 3/1, 5/1, 7/1, 10/1, and 15/1 Adjustable rate mortgages (ARMs)
  • 80/10/10 is also available
  • Not Eligible for VA and FHA programs

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. BMO Harris

BMO Harris is the 8th largest bank in North America by assets and provides financial services ranging from personal and commercial banking to wealth management and investment services. Among these many products, they also provide a construction loan with multiple down payment requirements for those looking to start a new construction project or renovate a home.

We spoke directly with a loan officer at BMO Harris to learn more about their construction loan terms and were able to get quite a lot of details. Here is what you need to know:

  • 700 Minimum credit score required
  • 10% down up to $1M loan amount (No PMI…720+ credit score required)
  • 20% down up to $2M loan amount
  • 30% down up to $3M loan amount
  • 35% down up to $4M loan amount
  • 40% down up to $5M loan amount
  • 45% down over $5M+ loan amount
  • 10% of the loan amount required for reserves
  • Primary residence and Second homes only (1 unit only)
  • Ground-up or tear-down construction utilizes Loans-to-Cost
  • Renovation utilizes As-Completed Value
  • 12-24 month construction periods are available 
  • 30/20/15/10 Fixed or ARM (5/6, 7/6 & 10/6) loan rates available
  • One-time closing automatically converts to permanent financing at the end of construction
  • Only 1 appraisal needed
  • 90 day lock same as 30 day pricing
  • Relationship rate discounts are available
  • Interest-only payments during construction
  • No prepayment penalty
  • No Spec or Investment Builds
  • No Builder Approval Required (must be licensed with General Liability coverage)
  • No owner builder
  • No Pre-starts
  • No Modular, Mobile for Manufactured homes

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. 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 competitive rates and should be one that you consider before making your ultimate decision.

We spoke to a TD Bank loan officer who personally closed over $300 million of mortgages last year to learn more about the TD Bank construction loan program. Here are the details:

  • 720-740 FICO score desired for credit approval
  • 20% down required on loans up to 1.5M
  • 30% down required on loans 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.

4. Warsaw Federal

Warsaw Federal started in 1893 in Cincinnati, Ohio but now offers services in many locations throughout the country, including Indiana. They’ve been providing mortgages for over 100 years, so naturally can assist with your construction product.

We corresponded with a loan officer at Warsaw Federal to learn more about their construction loan project and here is what we found:

  • Minimum 700 credit score required
  • 5% down up to $548,000
  • 10% down up to $900,000
  • 20% down up to $2,000,000
  • 25% down on Lot Loans
  • One-Time Closing! Loans convert to permanent mortgage at the end of construction
  • Construction periods of 8-12 months
  • 5/1, 7/1, 10/1 ARMs amortized over 30 years
  • Both stick-built and modular homes are eligible
  • No Self Builds must use an approved builder. 
  • The loan balance may be paid down until the final draw, reducing the mortgage amount and the monthly payment will be based on the new principal balance.

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. 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.

Is a construction loan a good idea in Pennsylvania?

Pennsylvania construction loans are a great way to finance your home construction project. Before you decide whether or not to pursue a construction loan, it’s a good idea to consider a few things first.

One of the biggest things to consider when getting a construction loan in Pennsylvania is the property itself. The lender will want to ensure that the land is suitable for construction and meets all zoning requirements. They will also likely require a survey and appraisal of the property before approving your loan.

Another thing to remember is that Pennsylvania construction loans are typically short-term loans. You will need to pay them off quickly once the home is completed or refinance them into a permanent loan (which many banks will offer).

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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