New Construction Loans for Real Estate Investors
Building a new home or investment property? We offer construction loans for investors and builders — fund the land purchase AND the build in one loan, with draws released as construction progresses. No income documentation required on investor programs.
Construction Loan Highlights
- Fund land + construction in one loan (one close)
- Draw schedule tied to construction milestones
- Interest-only during construction period
- Up to 75% of completed value (ARV) or 85–90% of cost
- Loan amounts from $150,000 to $5M+
- No income documentation on investor programs
- Single-family, duplex, and small multifamily eligible
- Converts to permanent financing (DSCR or 30-yr fixed) at completion
- Close in 10–21 business days
How Construction Draws Work
Rather than receiving the full loan upfront, funds are released in stages — called draws — as construction milestones are verified by an independent inspector. A typical 5-draw schedule looks like this:
Draw 1 — Foundation
Land acquisition + site prep + foundation complete. Typically 20–25% of loan.
Draw 2 — Framing
Exterior walls, roof framing, and sheathing complete. Another 20–25%.
Draw 3 — Mechanicals
Rough plumbing, electrical, HVAC roughed in. Another 15–20%.
Draw 4 — Drywall & Finish
Interior finishes, insulation, drywall, cabinets. Another 15–20%.
Draw 5 — Completion
Final inspection passed, CO issued. Remaining balance released.
Construction-to-Perm vs. Stand-Alone
Construction-to-permanent (C2P): One loan that automatically converts to a 30-year DSCR or fixed-rate mortgage when the build is done. One closing, one set of fees. Best for investors who know their exit at the start.
Stand-alone construction loan: Short-term 12–24 month loan for the build only. You refinance into permanent financing separately at completion. More flexible — useful if you expect rates to improve or want to shop the permanent loan at close.
New Construction Loan Terms
| Loan Feature | Typical Terms |
|---|---|
| Loan-to-cost (LTC) | Up to 85–90% of total project cost |
| Loan-to-ARV | Up to 70–75% of completed value |
| Construction term | 12–24 months |
| Interest rate | 9% – 12% (interest-only during construction) |
| Points | 1–3 points at origination |
| Minimum loan | $150,000 |
| Maximum loan | $5M+ (case by case) |
| Draws | 4–6 draws released at milestones |
| Income documentation | Not required on investor programs |
| Credit score minimum | 620 (better pricing at 680+) |
What We Finance
- Ground-up single-family investment properties (SFR, speculative build or custom)
- Duplex and small multifamily (2–4 units)
- Teardown and rebuild — demolish and build new on existing lot
- Land acquisition + construction combined in one loan
- Spec homes built to sell (no pre-sale required on most programs)
- Short-term rental builds (Airbnb/VRBO-ready construction)
Who Qualifies
We lend to first-time builders and experienced developers. No contractor license required on single-family investor programs — you hire a licensed general contractor and we fund their draws. Requirements vary by program, but generally:
- 620+ FICO (680+ for best pricing)
- 20–25% equity contribution (10–15% down on C2P programs)
- Licensed, experienced general contractor with verifiable work history
- Signed construction contract and itemized budget
- Plans and permits (or application in progress at time of close)
Construction Loan FAQ
Do I pay interest on the full loan amount during construction?
No — interest is charged only on the drawn balance. If your total loan is $500,000 but only $200,000 has been drawn, you pay interest on $200,000. Your payment increases as more draws are released.
Can I be my own general contractor?
On some programs, yes. Owner-builder programs allow experienced investors to act as their own GC. Requirements are stricter — we’ll want to see prior successful builds. Most investors use a licensed GC and we pay them directly from draws.
What happens if construction takes longer than the loan term?
Most programs offer 6-month extensions (with a small fee) if construction is in good progress but running behind. We’d rather extend than put you in a difficult position — just communicate early if you’re running behind schedule.
Can I finance a spec build without a buyer?
Yes. We have programs for spec construction where no pre-sale is required. You build, then sell or hold. The exit strategy (sell vs. refinance to DSCR) affects how we structure the loan.
What’s the difference between LTC and LTV on a construction loan?
LTC (loan-to-cost) is the loan as a percentage of total project cost (land + hard costs + soft costs). LTV (loan-to-value) or ARV is the loan as a percentage of the completed property value. Lenders use the lower of the two to set your loan amount. Example: $400K project cost at 85% LTC = $340K loan; $550K ARV at 70% = $385K. Loan is capped at $340K.
Planning a ground-up build? Get a new construction loan quote — no upfront fees, quick decision.