Up to 85% LTC · 100% Construction Costs · Interest-Only on Drawn Funds

Ground-Up Construction Loans for real estate investors.

Finance land acquisition and 100% of construction costs from foundation to final inspection. Interest-only payments on what you've drawn — not the full commitment. Build to sell, build to rent, or build and refinance into a DSCR. No tax returns required.

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85%

Max LTC

100%

Construction costs

Interest

Only payments

12–24

Month terms

All 50

States

Construction Loan Terms at a Glance

Built for builders. Not banks.

Traditional banks underwrite construction loans against personal income and require months of processing. We underwrite the project — the plans, the budget, the completed value, and your experience. If the project makes sense, we fund it.

Max LTC

Up to 85%

of total project cost

Construction financing

100%

of hard construction costs

Land financing

Up to 75%

of land value or purchase

Max LTARV

70–75%

of completed value

Rates from

10.49%

interest-only on drawn funds

Loan terms

12–24 mo

extensions available

Loan amounts

$150K–$5M

SFR to small multifamily

Close time

10–14 days

from application to funded

The Two Ratios Every Builder Must Understand

LTC and LTARV: both matter. Both cap your loan.

Construction loans are underwritten against two different ratios simultaneously — and both limits apply. Many investors only know one of them and get surprised at underwriting. Understanding both upfront tells you exactly how much you can borrow before you start the process.

Primary Ratio

Loan-to-Cost (LTC)

Loan amount ÷ Total project cost

LTC measures your loan against the total budget — land, hard costs (labor and materials), soft costs (architect, permits, insurance), and contingency. If your project costs $1,000,000 total and we lend at 80% LTC, your maximum loan is $800,000. You bring the remaining $200,000. Most programs cap LTC at 75–85%.

Secondary Ratio

Loan-to-After-Repair-Value (LTARV)

Loan amount ÷ Completed project value

LTARV measures your loan against what the finished property will be worth when construction is done. If the appraiser values the completed home at $1,400,000 and we cap LTARV at 70%, your maximum loan is $980,000 — regardless of what LTC allows. Both ratios apply simultaneously and whichever produces the lower loan amount is the binding constraint.

The Binding Constraint

Which ratio limits your loan?

Lower of LTC cap or LTARV cap

The loan amount is the lower of what LTC allows and what LTARV allows. Projects with high soft costs relative to ARV are typically constrained by LTC — you need more equity. Projects where construction costs exceed finished value are constrained by LTARV. Run both calculations before submitting to avoid surprises at underwriting.

How Construction Draws Work

You pay interest only on what you've actually drawn.

Construction loan funds are not disbursed at closing — they're released in draws as construction milestones are completed and verified by a third-party inspector. This protects both parties and keeps costs manageable during the build. Early in the project when only site prep is funded, your interest payment is very low. It grows as draws are released and the balance increases.

Example draw schedule — single-family spec home

A typical SFR construction loan draws in 6–7 phases over 9–12 months. The inspector visits after each phase, verifies completion, and approves the next release. You never pay interest on unfunded commitments — only on the amount actually drawn and outstanding.

5%
At closing — site preparation
Initial advance covers land acquisition (if applicable), site clearing, grading, and utility connections. Your first interest payment is on this small balance only.
15%
Foundation complete
Footings poured, foundation walls up, slab or basement floor complete. Inspector verifies before release.
20%
Framing complete
Largest single draw — walls, roof structure, and exterior sheathing complete. Structure is visible and verifiable.
15%
Mechanical / electrical rough-in
HVAC, plumbing, and electrical rough-in complete and inspected by local building department.
15%
Drywall complete
Insulation, drywall hung and finished. Interior begins to take final shape.
15%
Final inspection passed
Flooring, fixtures, cabinetry, trim complete. Certificate of occupancy issued or applied for.
15%
Project close-out
Final punch list complete, CO in hand, landscaping done. Project is sale-ready or refinance-ready.

Qualification Requirements

What you need to qualify.

Construction loans have more rigorous underwriting than fix-and-flip or DSCR loans because the project doesn't exist yet and more can go wrong. Here's what matters most — and how to position your application for approval.

Borrower requirements

✓Credit score 640+ (680+ preferred)
✓Prior ground-up or heavy rehab experience (1–3 completed projects typical)
✓Licensed general contractor or experienced GC relationship
✓Liquidity to cover 15–25% of total project cost
✓6–12 months reserves post-closing
✓No tax returns or W2s required
✓Entity borrowing (LLC) fully supported

Project requirements

✓Approved plans or permit-ready plans at minimum
✓Detailed construction budget with contractor bids
✓Realistic construction timeline (typically 9–18 months)
✓Clear exit strategy — sell or refinance into DSCR
✓LTARV at or below 70–75% of completed appraised value
✓Non-owner-occupied investment properties only
✓SFR, 2–4 unit, small multifamily, townhomes

The most important thing first-time construction borrowers get wrong

Budget contingency. Most first-time builders underestimate costs by 15–25% — and construction loans don't allow mid-project increases without significant restructuring. Build a 15–20% contingency into your initial budget and model your project economics at the higher cost figure. If the numbers work with a 20% cost overrun, the project is fundable. If they only work at the exact budget, you're taking on more risk than most lenders will accept.

Exit Strategies

Build to sell. Build to rent. Or both.

A construction loan is short-term by design — 12 to 24 months. When the project is complete you need a clear plan for repaying it. There are three primary exit strategies and we support all of them.

Exit 1

Sell the completed property (spec home)

Build a spec home, list it, sell it, and pay off the construction loan from proceeds. This is the most common exit for SFR builders. Target 20–30% profit margins — construction profit equals completed value minus land, hard costs, soft costs, and financing. The construction loan is repaid at closing from the sale proceeds.

Exit 2

Refinance into a DSCR loan (build-to-rent)

Complete construction, lease the property, then refinance into a 30-year fixed DSCR loan using the rental income to qualify. This is the build-to-rent strategy — you get the benefit of building at cost rather than paying market price for an existing rental, and you hold a stabilized asset with a permanent financing stack. We originate both the construction loan and the DSCR refinance.

Exit 3

The Build-to-Rent BRRRR

Build a property, complete construction, lease it, refinance into a DSCR loan at 75–80% LTV of the completed appraised value, and use the cash-out proceeds to fund the next construction project. This is the most aggressive portfolio-building strategy — each completed project partially or fully funds the next acquisition. Experienced builders in high-appreciation markets have used this strategy to scale from a handful of properties to dozens within a few years.

The Process

From lot to funded in 10–14 days.

Submit your project

Property address, plans or permit status, total budget, ARV estimate, and your experience summary. No hard credit pull.

Term sheet in 48 hrs

We review the budget, run LTC and LTARV calculations, and send a written term sheet with loan amount, rate, and draw schedule.

Appraisal ordered

As-built appraisal ordered based on plans and specs. Appraiser estimates completed value — this sets your LTARV ceiling.

Underwriting

Budget review, contractor verification, experience verification, title and entity docs. Typically 5–7 days.

Close and break ground

Initial draw funded at closing. Construction begins. Subsequent draws released within 24–48 hours of inspector approval at each milestone.

Complete 2026 Guide

Ground-Up Construction Loans: The 2026 Investor Guide

Ground-up construction is the highest-margin strategy in real estate investing — and the most complex to finance. Building from the ground up allows investors to create assets precisely tailored to what the local market wants: the right floor plan, the right finishes, the right price point. Done well, spec construction generates 20–30% profit margins that are difficult to achieve buying existing properties in competitive markets. The construction loan is the financial engine that makes it possible.

How Construction Loans Differ from Every Other Real Estate Loan

Every other real estate loan — DSCR, fix-and-flip, bridge, portfolio — finances something that already exists. Construction loans finance something that doesn't exist yet. This fundamental difference drives everything about how they're structured, underwritten, and managed. The lender is betting not just on today's value but on the borrower's ability to execute a project on time and on budget to produce a future value. That's a meaningfully different risk profile, which is why construction loans require more upfront documentation, more borrower experience, and more ongoing oversight than any other loan type.

The Interest-Only Structure — Your Cash Flow Advantage

One of the most valuable features of construction loans is the interest-only payment structure on drawn funds. At the start of your project — when only the initial draw for site prep has been funded — your monthly payment might be on $50,000–$100,000 of loan balance. That's a very manageable carrying cost. As construction progresses and draws are released, the balance and the payment grow. By the final draw, you're paying interest on the full commitment. This progressive structure keeps early-stage carrying costs low and aligns your financing cost with your construction progress.

Permits and Plans — What You Need Before Closing

Most construction lenders require at minimum approved architectural plans before closing. Full building permits are preferred — and on some programs, closing within a few business days of permit approval is possible. The appraisal is based on your plans and specs, so the more detailed and complete your construction documents, the more accurate and favorable the appraised completed value. Budget time for permitting in your project timeline — depending on the jurisdiction, permitting can take 30 to 90 days or more. Experienced builders in their home markets know the local permitting environment and plan accordingly.

Builder and Contractor Requirements

Construction loans require either that you are a licensed general contractor or that you have a strong relationship with one. Most programs want to see at least 1–2 completed ground-up projects or significant heavy rehab experience. First-time builders can sometimes qualify with strong financials, a conservative project, and an experienced GC who takes on primary construction responsibility. The lender is effectively evaluating the entire project team — your experience plus your contractor's experience equals the total execution capability they're underwriting.

From Construction Loan to DSCR — The Build-to-Rent Lifecycle

The most sophisticated application of construction financing is the build-to-rent strategy — building a property specifically intended as a long-term rental hold, then refinancing the construction loan into permanent DSCR financing once the project is complete and leased. This strategy produces several advantages over buying existing rentals. You buy at construction cost rather than retail market price, which often means significantly more equity in the finished asset. You get new construction — no deferred maintenance, modern mechanicals, energy-efficient systems, and tenants who pay premium rents for new properties. And you get a clean refinance into a 30-year fixed DSCR loan using the rental income to qualify — no personal income documentation required.

Construction Loan FAQ

Common Questions from Builders and Developers

Approved architectural plans are the minimum — most programs want to see permit-ready plans at application. Full building permits are preferred and on some programs we can close within a few business days of permit approval. If permits aren't yet in hand, the appraisal will still be ordered based on your plans and specs, and the loan is structured to close quickly once permits are issued.

Ready to break ground?

Up to 85% LTC. 100% construction costs. Interest-only on drawn funds.

Tell us about your project — plans, budget, location, and timeline. We'll run the LTC and LTARV and send you a term sheet within 48 hours.

Call Dominick: (908) 220-6404 →Apply Online