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I’m an associate at a firm in Houston and used JD Mortgage thanks to your advice! The experience was great—they were super fast and responsive.” —Mary Kate Raffetto Beck Redden LLP

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5 Best Construction Loans In New York

Key Terms

Construction loans are a type of loan that is used to finance the construction of a new building or to renovate an existing one.
These loans are typically short-term and require borrowers to provide detailed plans and a budget for the project.
In New York, construction loans may be obtained from a variety of lenders, including banks, credit unions, and private lenders, and can be used for a wide range of construction projects, from single-family homes to large commercial buildings.

New York is the Empire State and has one of the highest per-capita incomes of all the states with the average New York resident earning over $100,000 per year. Known for the New York City skyline, Niagara Falls and its many lakes and mountains, it’s not a surprise that many people in New York consider building a new primary home or vacation home at some point in their lives.

Real estate experts report that it can cost up to $300 per square foot to build a house in NYC, whereas the typical price of building in other parts of New York outside Manhattan and Brooklyn range from $100 to $200 per square foot. Meanwhile, the median sales price in the state is $480,000 according to the New York State Association of Realtors.

With such high median sales prices, it’s good that there are several construction loan options to consider if you’re planning to build a house. Building your dream home takes time, patience, and financial resources. In New York, you must ensure that everything is in place due to complex regulations and requirements, such as complying with state building laws, environmental laws and state codes.

Rather than trying to go through a refinance or trying to get a traditional mortgage loan for a family home, a construction loan from construction lenders may be better for your needs.

Unlike traditional mortgage loans, borrowers using construction loans can decide on where in their home to remodel from the ground up. The approval process depends on the individual bank, but you’re often able to get through more short-term construction projects once approved for this loan.

As you go through the process of building a home, you’ll want to work with a loan officer that has years of experience doing construction projects. Unlike a traditional mortgage, construction loans have different requirements and procedures that will make you grateful to work with someone who has been through the process many times before you.

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Benefits of a new construction loan in New York

Every person thinking about building a home understands the pressure that construction brings. From the land to the foundation to the final structure, a construction loan covers the cost of building or renovating your house. Finding the your dream single family home on the NMLS can be exciting, but it can also be frustrating if you realize you need to make some changes to customize it. If you want to carry out big projects on your intended purchase, home construction loans can help you achieve these goals quickly.

Unlike typical home loans, a lender will disburse the funds to your contractors through a series of draws that come as each stage of the project is completed and inspected by the bank. In other words, you’ll qualify for the funds upfront but your lender will make small installment payments in the various stages of the project.

Once the project is completed, your construction loan will turn into a permanent loan that functions more like a traditional mortgage. You’ll want to understand the details with your bank before you commit to anything as various banks handle this conversion process in different ways. Doing some research on loan rates, loan terms, and credit score requirements is a good first step for home construction loans.

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5 Best banks in New York for construction loans

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

1. 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 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 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 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.