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5 Best Construction Loans in Oregon

Key Terms

Construction loans are a type of financing that helps individuals or companies build new structures or renovate existing ones. These loans are typically short-term and require borrowers to provide detailed plans and cost estimates for their project.
Oregon’s construction loan market is highly competitive, with many lenders offering a range of products and services to borrowers. Some lenders specialize in particular types of projects, such as single-family homes or commercial properties, while others offer more flexible financing options.
Before applying for a construction loan in Oregon, borrowers should carefully consider their financial situation and the scope of their project. They should also shop around for lenders and compare loan terms and interest rates to find the best deal. Additionally, borrowers may need to provide a down payment or collateral to secure the loan.

Oregon has a long history in the United States, having been admitted to the union prior to the Civil War. The state is home to more than 4 million people living across 98,000 square miles, making it the 27th most populous state. Oregon’s only national park, Crater Lake, is the deepest lake in the United States.

With so many residents and tourists, it’s no surprise that housing prices are increasing. According to the Federal Reserve Economic Database, the house price index for Oregon was 20% higher than it was for the same quarter in the prior year. Many people are turning to construction loans as a way of financing a new build rather than bidding on limited housing inventory in the state.

Finding the right real estate has never been more challenging for those moving to or moving with Oregon, which is why many different kinds of borrowers are looking for alternative financing options. Once you spot and save the perfect place on the NMLS, you might have some ideas about short-term projects a home builder could help you with, and home construction loans can make this a reality.

But where do you get the money to build a home? Since the home doesn’t yet exist, there’s no collateral to put up for the loan. That’s where construction loans can be a great solution. There are many lenders in Oregon that are experts in construction loans. They can show you that these loans are easier to get than you may think.

As you navigate the world of construction loans, you’ll want to work with a loan officer at the bank that has extensive experience with these types of loans, as they are much different than traditional mortgages. In this article we’ll walk you through the pros and cons of construction loans, along with the lenders we uncovered during our research who are providing construction loans in Oregon.

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Advantages to taking out an Oregon construction loan

Oregon construction loans can finance most of the steps for building your new home. These steps include:

Purchasing the land
Taking care of permits and fees
Closing costs
Labor and materials for construction

Depending on the lender, these loans may include other steps such as home design and more.

Construction loans aren’t only for new construction. You can use construction loans on the home you already have. Maybe a new addition or remodeling will make your current home into your dream home. Or, you could purchase an older home that’s less expensive with a conventional mortgage and then use a construction loan for renovations. Either of these strategies could save you a lot of money over purchasing a new home.

Construction loans have advantages over some other types of loans used for remodeling or renovations. Many people use a home equity line of credit or a home equity loan for new construction on their existing home. The amount you can get for these loans is based on the current equity you have in your home.

With construction loans, the amount of the loan is based on the estimated future value of the home when the renovations are complete. This can cause a significant increase in the loan amount you receive over home equity loans. Using a construction loan for renovations can substantially increase the value of your home after the construction is complete.

As you look through construction financing options, make sure you keep notes about loan terms, loan rates, and the monthly payment requirements from each lender.

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5 Best Oregon construction loan lenders

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

1. Oregon State Credit Union

Oregon State Credit Union was started in 1954 by an associate professor at Oregon State University. It now has over a billion dollars in assets and thousands of members. Perhaps not surprisingly, they provide a construction loan product (among many other financial services) to Oregon citizens.

We wanted to know more about Oregon State Credit Union and their construction loan, so we reached out and here’s what we found:

One-close construction loan offered
$500 reduction off lenders fee for Premier Members
Smaller monthly payments in the beginning because you pay only the interest during construction
Flexible terms of 15, 20 and 30 years
Locally serviced loan: Talk to a real person and make your payments locally
Having your construction loan and traditional mortgage loan in one closing provides a financial benefit
Down payment as low as 20%
If you own the land, your land may be used towards your 20% down payment