5 Best Construction Loans in Maryland

Maryland was the seventh state admitted to the union, and is named after Henrietta Maria (the wife of King Charles I). She was known as Queen Mary in England but didn’t like the name and didn’t use it, so it’s ironic that she ended up with a state named after her. Maryland has always been densely populated given its relatively small land size.

Due to its density, many people in Maryland consider building their own homes, which expands the housing supply and keeps real estate prices in check. The most recent number show that the average sales price of a single family home in Maryland has reached $484,283, according to the Maryland Realtors Association.

Fortunately, construction loans offer a unique opportunity for homebuyers to build their dream homes. But with so many options available, and given the complexities of building, how do you choose the best construction loan and lender to help guide you through the process? We will highlight the benefits and types of construction loans available to borrowers to answer this question.  

Advantages of construction loans in Maryland

Construction loans in Maryland offer many benefits. Some of the benefits include:

Flexible repayment terms. Depending on your lender, you can tailor when you’re making interest only payments and when you are paying on the principal. Construction loans typically have a window from six to 18 months to get the construction project finished.

Low down-payment options. Construction loans in Maryland can provide up to 90 % of the capital you need to finance your project. This makes it a great option if you do not have the necessary down payment funds on hand. Also, you’ll have the funds you need to cover the cost of materials and labor, among other requirements.

Available for renovation projects. Many people aren’t aware that you can use a construction loan to fund a renovation project on your existing home, which might make more sense than buying a new home and taking out a mortgage loan depending on your circumstances.

5 Best Maryland banks for construction loans

If you’re planning to build or renovate a home, here are the top construction loans in Maryland.

1. Shore United Bank

Shore United Bank is located in Easton, Maryland and is the largest independent bank holding company on Maryland’s eastern shore. The bank offers personal banking services, home equity loans, investment accounts and title insurance services to local clients, including a construction loan product.

We reached out to Shore United Bank to learn more about their construction loan. Here are a few of the key highlights:

• Offers a construction-permanent loan product that covers both the construction draw period as well as the traditional long-term mortgage financing.
• Can be used for new construction to either build a home from ground up or make substantial renovations to an existing home.
• Once the construction phase is complete a simple modification agreement is used to transfer to permanent financing. 
• Interest rate is determined at time of application. Interest only payments during the 12-month construction draw period. You pay interest only on the loan amount disbursed. 
• Monthly principal and interest payments begin after the construction period. 

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. Tidemark Federal Credit Union

If you’re looking to work with a credit union, Tidemark Federal Credit Union is a local Delaware and Maryland lender that offers construction loans for primary residences.

We contacted Tidemark Federal Credit Union to learn more about their construction loan program and here are the highlights:

• Construction-to-permanent loan option features one closing
• Primary residences
• During construction, get financing for up to nine months and up to 100% of your property’s value at a fixed rate with interest-only payments
• Construction loan converts to an Adjustable-Rate Mortgage once your home is complete, saving you thousands of dollars in additional settlement costs
• For land loans, borrow up to 70% of the lot’s value (up to $400,000)
• For land loans, repayment terms up to 15 years

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 is a robust construction lender and should be one that you consider before making your ultimate decision.

We reviewed the TD Bank website to learn more about the TD Bank construction loan program. Here are the details:

• 720-740 FICO credit score desired
• 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 loan terms 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. Provident State Bank

Provident State Bank is a community bank established in 1904 and serving the Maryland mid-shore region. Sometimes working with a local bank is best, which is reason to consider them for your construction loan if you’d prefer the local touch.

We wanted to learn more about their construction loan, so we contacted them to get a few details:

• Offers construction bridge loans and construction-to-permanent loans.
• Local lenders who always are available to answer your questions in person or over the phone.
• Flexible draw schedule and same day funding via online banking. They can directly pay your general contractors via cashier’s check, wiring or direct account funding.
• Up to 12 months interest only payments fixed at prime + 1%
• Your final loan rate will be determined at the completion of construction

The fees you pay will vary. Being a deposit client of PSB Bank with a line of credit or checking account can help reduce those fees.

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, underwriting 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.

Should you pursue a Maryland construction loan?

A construction loan in Maryland can offer many benefits for those looking to finance a construction project. But, before deciding if a loan is right for you, it is important to compare the terms and conditions of various public and private lenders.

You’ll also want to make sure that you are working with a loan officer that specializes in construction loans. Construction loans are different from a traditional mortgage, so working with a loan officer that does construction projects day in and day out will make sure your project runs smoothly.

There can be a lot of variation in the terms and conditions of different construction loans. Some things to compare include the interest rate, the loan length, and any fees or prepayment penalties. Shopping around and comparing offers before deciding on a loan is essential. This will ensure you’re getting the best deal possible.

Looking for a construction loan in a different state?

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