5 Best Construction Loans in Washington


Construction loans in Washington are options for people looking to build a new home or renovate an existing property.

The state of Washington is known as the Evergreen State and is famous for its national parks, Space Needle in Seattle and the fact that it was named after George Washington, the first US president (and the only state named after a president).

According to Washington State’s Office of Financial Management, the median home price stands currently at $452,400. With housing inventory at record lows, many homebuyers have decided to forgo negotiating with buyers and sellers in a seller-friendly market and are instead turning to construction loans to build a home or renovate an existing property. Local real estate experts have reported that the cost of building in Washington ranges from approximately $80 to $125 per square foot depending on the build quality.

Top-rated home construction loans in Washington are those with low-interest rates and a wide range of options. They can also have financing as low as 5% down and accept credit scores below 700. The best construction loan lenders offer their home building loan services in several locations and various building loans based on your individual needs.

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Reasons to consider a construction loan in Washington

A construction loan is an excellent way to receive the funds you’ll need to cover the costs of obtaining land, building materials, labor, and other applicable costs. Before looking at the best construction loans Washington, let us review the benefits of acquiring these short-term loans. They include:

  • Requires you to make interest-only monthly payments during construction. Most lenders require you to pay the full loan amount once the project is complete for a construction-only loan or let you convert to permanent financing if it’s a construction-to-permanent loan.
  • More flexible loan terms compared to traditional loans since you will have to provide your building plans for the lender to develop their financing terms and conditions.
  • Construction loans often become mortgage-like home loans once the construction is complete. In other cases, borrowers can negotiate to lock in the rate of interest of such loans at the beginning of the construction period.
  • The lender will carefully scrutinize your loan application and construction plans to ensure everything is in order. This will help the borrower plan better and consider everything involved more thoroughly, increasing the chances of a successful building project.
  • A construction loan enables the borrower to choose their preferred contractor and architect who will build their dream home.

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5 Best Washington construction loan lenders

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

1. US Bank

US Bank is a large lender with a solid construction loan option. They can’t handle owner-builder construction loans, 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 loan rates 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.

2. 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.

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 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.

4. Timberland Bank

Timberland Bank opened its door more than 100 years ago in downtown Hoquiam, a timber town near the Washington coast. Started as a bank to fund loggers and the local town support loggers, Timberland Bank has grown into a significantly larger community bank today that is listed on NASDAQ and has assets of nearly $800 million. Not surprisingly, they have a construction loan product for Washington residents.

We contacted Timberland Bank to ask them for details about their construction loan. Here is what you need to know:

  • Two-step construction loan provides financing for loans that exceed 80% loan-to-value.
  • You pay interest only during the construction phase as funds are used.
  • The construction term is 12 months.
  • Your loan officer will assist you with converting to permanent financing.
  • Owner-builder OK
  • Partnered with Northwest Construction Control (NWCC) in order to provide timely and qualified inspections for your construction project.

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

5. BMO Harris

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

We spoke directly with a loan officer at BMO Harris to learn more about their construction loan program 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 or remodel utilizes As-Completed Value
  • 12-24 month construction periods are available 
  • 30/20/15/10 Fixed or ARM (5/6, 7/6 & 10/6) 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

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

Is a Washington construction loan a good idea for you?

When it comes to construction loans in Washington, there are numerous options for borrowers to choose from. However, it would be best to evaluate them against your needs to find the most suitable option. Luckily, most lenders have flexible credit score criteria and minimum down payment options, making applying for their construction loans simple. 

If you are looking for more insight about construction loans in your state, make sure you partner with a loan officer at a bank that is familiar with construction loans. We can help match you with the right loan officer so that you can start building your team.

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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