Best Construction Loan Lenders in Washington 2026: Top 7 Ranked
Kevin Martinez
Washington Construction Loan Expert | 14+ Years Experience
January 22, 2026
Looking for the best construction loan lenders in Washington? Building a custom home in WA? We ranked the top 7 lenders offering competitive rates, flexible terms, and construction-to-permanent loans.
7.25%
Avg Construction Rate
10-20%
Down Payment
12 mo
Build Timeline
$650K
Avg Build Cost
🏆 Top 7 Construction Loan Lenders Washington 2026
USAA - Best Construction Loan Washington
1,200+ WA builds
Why #1:
- 💰 Best rates: 7.05%-7.35% APR
- 🏆 Construction-to-permanent (one closing)
- ⚡ 10% down minimum
- 📍 Strong in Seattle/Bellevue/Tacoma
- 🎯 Military discounts available
Best For:
Washington homebuilders wanting lowest rates + one-time close
📊 Washington Construction Costs by Region 2026
| Region | Cost per Sq Ft | 2,500 Sq Ft Home | Land Cost |
|---|---|---|---|
| Seattle Metro | $280-$350/sq ft | $700K-$875K | $250K-$500K |
| Bellevue/Eastside | $300-$380/sq ft | $750K-$950K | $300K-$600K |
| Spokane | $180-$240/sq ft | $450K-$600K | $80K-$150K |
| Olympia/Tacoma | $220-$280/sq ft | $550K-$700K | $120K-$250K |
✅ Washington Construction Loan Requirements 2026
Borrower Requirements
Credit Score:
680+ required (720+ for best rates)
Down Payment:
10-20% of total project cost
DTI Ratio:
43% max (including construction payment)
Reserves:
6-12 months PITI in savings
Project Requirements
Detailed Plans:
Architectural plans + specs required
Licensed Builder:
WA-licensed contractor required
Appraisal:
Based on completed home value
Timeline:
12-month build period typical
💰 2 Types of Construction Loans
1. Construction-to-Permanent (One-Time Close)
Best Option: One loan, one closing, one set of fees
How it works:
- Lock rate at start of construction
- Pay interest-only during build (12 months)
- Automatically converts to permanent mortgage
- Save $5K-$10K in closing costs
2. Construction-Only (Two-Time Close)
Traditional: Two separate loans, two closings
How it works:
- Short-term construction loan (12 months)
- Pay interest-only during build
- Refinance into permanent mortgage after completion
- Pay closing costs twice
❓ FAQ: Washington Construction Loans 2026
How much does it cost to build a house in Washington?
Washington Average Construction Costs (2026):
- Seattle Metro: $280-$350/sq ft ($700K-$875K for 2,500 sq ft)
- Bellevue/Eastside: $300-$380/sq ft ($750K-$950K for 2,500 sq ft)
- Spokane: $180-$240/sq ft ($450K-$600K for 2,500 sq ft)
- Olympia/Tacoma: $220-$280/sq ft ($550K-$700K for 2,500 sq ft)
Add: Land cost ($80K-$600K depending on location)
What is a construction-to-permanent loan?
A construction-to-permanent loan (also called "one-time close") combines construction financing and permanent mortgage into ONE loan.
Benefits:
- One application, one approval, one closing
- Lock your rate before construction starts
- Save $5K-$10K in duplicate closing costs
- Automatically converts to permanent mortgage when done
Timeline:
- Months 1-12: Construction phase (interest-only payments)
- Month 13+: Permanent mortgage (principal + interest)
How do construction loan draws work in Washington?
Construction loans release funds in stages (draws) as work is completed:
Typical Draw Schedule:
- Draw 1: Foundation complete (20%)
- Draw 2: Framing complete (20%)
- Draw 3: Rough mechanicals (20%)
- Draw 4: Drywall complete (20%)
- Draw 5: Final completion (20%)
Process: Inspector verifies work → Lender releases funds → Builder gets paid