Church Construction Loans & Financing

How do you find the perfect house of worship for your community? Building new allows you to meet all of your needs. Craft the right space for your services, sermons, and worship. From natural light, to educational facilities, to a space for community events, a church construction loan allows you to build a new, perfectly tailored home for your congregation.

Church Construction Loans

Church Construction Financing

construction loans for churches

House of Worship

A church construction loan finances your community’s new home, built to your specifications.

Loans for construction of church buildings and landscaping

Land & Landscaping

Worship in nature. Church construction financing can include your land, trees, gardens and more.

Financing construction of chuch community centers

Community Service

Many traditions serve the larger community. Church construction loans can cover daycare facilities, schools, shelters, and more.

An Overview of Church Construction Financing

Church Construction Loan in processConstruction financing is a unique type of loan specifically structured around the building process. These loans last the length of the construction project and fund the process through step by step payouts.

Consequently, for faith-based organizations who will continue to own and manage the property after completion, we often recommend a loan structure with a construction-to-permanent financing option (referred to as a “term to perm loan”). That means you don’t have to refinance your loan at the end of construction.

Construction loans are not funded all at once, in a lump sum like other loans. They pay out based on stages – clearing land, laying infrastructure, pouring concrete. Everything up to the roof and even the final walk through is included on the plan.

Because a church construction loan is staged based on each phase of production, it means that the builder doesn’t get paid until their work has been thoroughly inspected. In addition, you don’t pay any interest on each stage of the project until the money is paid. That helps keep your project on time and on budget.

Church being built with church construction financing

Do we need construction financing for our building project?

It depends. Sometimes you can find the perfect house of worship already built and selling for a great price. In that case, you want a church mortgage.  In other situations, a congregation may be able to leverage a church renovation loan to remodel or expand their current building to meet the needs of their growing community.

But in other cases, construction financing is often the best solution. Most often, communities of faith utilize church construction financing when there are no properties on the market that fulfill their vision. Other times, building a new property is less expensive than buying a comparable finished property.

Once you know that construction is the right path, should you obtain financing? Some faith organizations have amassed the reserves to pay for construction out of pocket, which avoids any interest during the construction process.

But for growing churches that don’t have sizable cash reserves, construction financing for the church provides an affordable tool to build a new home for their community. Even when a congregation can can pay for construction outright, the additional scrutiny that your lender applies to your church construction plan and their third-party verification of the work done at each stage can be worth it to keep the project within tolerance and on budget.

How do we qualify for a church construction loan?

Reaching agreement on terms for a church construction loanLoans for church construction are approved on a variety of criteria. Lenders first want to verify that your community can make the payments in a timely manner during the construction period. Then, they want to confirm the organization is eligible for refinancing, or has a plan to repay the principal at project completion.  This is accomplished by examining the past a current financial statements – or budget – for the church.

Once the financial questions are out of the way, lenders want to dig into the construction plan. They will vet your general contractor and the subcontractors listed on the project. Their goal is to confirm the team is reputable and has the capacity to deliver. They also want to understand the details of the plan. What stages will be completed and on what timeline? There’s nothing that will throw a project off more than pouring concrete or shingling a roof in the wrong weather. If your leadership has not previously managed multiple large construction projects, this additional support from lenders can be invaluable.

apply for a church loan

Step 1: Apply

Apply in under 3 minutes.

connect with church funding specialists

Step 2: Connect

Consultants explain all options.

funding for church loans for small churches

Step 3: Get Funding

Select the best fit and get funded.

What are the rates & terms?

Most church construction loans require a minimum 10% down payment, plus interest payments during the construction phase. At the conclusion of the project, the loan is closed with a “balloon” payment – a lump sum due at the end of the project. That can either be paid outright by your church or faith organization at the time it is due, or you can utilize your new property and buildings as collateral for a mortgage loan.

Interest rates start at 5%


Is church construction riskier than buying an existing property?

Each type of property comes with some form of risk. An existing property could be appraised at too high a value. Or, inspectors could miss problems with the foundation or mechanical systems that ultimately lead to increased costs.

Likewise, a construction project comes with risks. Materials could cost more than in the estimated budget. Land could settle after construction, or labor shortages might delay phases of the project.

To mitigate risks, our team helps churches to plan some flexible budget items to cover unanticipated events, regardless of whether you are buying an existing property or building from ground up.  In other words, your church construction loan will include a built in buffer to protect your community in case of unforeseen costs during the building process. 

Can any faith organization get a construction loan?
Construction loans are based on the financial picture of your community and the construction plan. If a church can make payments, but the lenders can’t agree on the contractor mix, a community might lose out on the opportunity to get construction funding.

To increase the opportunity to get construction financing, it’s important to maintain flexibility, including restructuring stages of the construction project, changing contractors, or adapting the scope of the project. Our team of specialists will help you walk through all of these options so you can secure the lowest overall construction costs and interest rates.

How long do church construction loans last?
A construction loan lasts as long as the construction job. Once the construction project is approved, your faith community will either pay in full, or refinance the construction loan into a commercial mortgage. Depending on the complexity of the construction, this may be a few months or over a year.
Are there alternatives to church construction loans?

Yes indeed! While a church construction loan is typically the best for ground up building projects, it isn’t the right fit for every need.

If there is an existing building for sale at a good location, it might be better to finance the purchase of that church through a church mortgage.  Or, if your current property would work with a bit of remodeling or expansion, then consider church renovation financing. Our church lending consultants often recommend considering these options prior to starting a new construction project.

Alternatively, church equipment financing can update your current property with new playgrounds or the installation of new audio visual equipment, HVAC systems, and so on. Or, if your current church building is a perfect fit but the costs are too high, then refinancing your church mortgage might be the easiest solution. At Faith Based Funding we believe in finding the right solution for your congregation’s unique needs. It all starts with a conversation, so reach out today!

Church Loans Made Simple
apply for church funding and church mortgage refinancing

1. Apply

Start with an online application in just 3 minutes.

connect with consultants in church funding

2. Connect

Consultants help you evaluate financing options.

church funding for church equipment and church vehicle

3. Funding

Funds are deposited directly into church account.

Let's start.