"Ground Up" Construction Loans

Essentially, construction loans are streamlined financing solutions that allow developers to borrow construction funds to pay for building materials, labor, and the land itself. These loans can be used to build single family homes, multi-family units, condominiums and townhomes.

We provide short-term financing for all of your ground-up construction needs. We offer 18-month terms with rates starting at 11.29%. We can even fund the purchase or refinance of entitled lots, ready for building your project. Whether you’re constructing single-family homes, condos, townhomes, or 2-4 unit properties, we’ve got a solution for you!

Construction loans differ from traditional loans in several key ways:

• Unlike traditional mortgages, commercial construction loans offer short loan terms, typically for a period of 12-18 months, depending on construction plans.

• The application and approval process is far more thorough, requiring a review of architectural plans, construction timelines, and line-item budgets for each phase of development.

• Once approved for a construction loan, funds are not disbursed in a lump sum. Rather, disbursements are made through a loan draw process, similar to a line of credit.

• Subsequent payments are made directly to builders through a series of construction draws based on the completed stages of development. These may require an inspector evaluation before the construction draws are processed.

• For our construction loans, you pay interest on funds as they are drawn and not on the entire loan amount.

• Once construction is complete, loans can be converted into a traditional mortgage to simplify the repayment process.

• All lending for investment purposes only
• Interest calculated on drawn balance unless Gross Interest is selected
• Construction draws based on inspection report or supporting documentation
• No rural properties
• No Individuals. Borrower must be an LLC or Corporation
• Minimum 660 credit score. Exceptions considered with compensating factors
• Must have demonstrated experience of similar property types and size in the last 18 months. Demonstrated experience is evidenced of completed and sold or stabilized inventory
• Liquidity >= 5% relative to the committed loan
• Personal Guarantee preferred; Limited Guarantee considered with 50bps fee paid at closing (may not be rolled into the loan balance)

Flexible Terms:
Since construction loans are short-term and are dependent on the completion of the project, our lenders will want you to provide a construction timeline as well as detailed plans and a realistic budget. This actually means that you’ll have a bit more flexibility when it comes to your loan terms compared to a traditional loan, since our lenders understand exactly how far along you are according to your timeline.

It can Transition to a Permanent Loan:
With our construction loans, you only have to pay interest on your loan while construction is in progress. Once construction is complete, the loan can be transitioned to a mortgage-like loan. And since you only pay interest during construction, you’ll have a lower monthly obligation which allows you save more money through the process. This can be particularly helpful should you not have the ability to raise sufficient funds for loan repayment within the short-time frame of the loan.

Guidelines Keep You on Track:
Because our lenders depend on the completion of the project for you to pay the loan back, they can be stricter when it comes to you providing a construction plan. This involves getting specifics from your contractors about dates, materials, workers, methods, etc. for the project. However, having strict guidelines can help you get the job done on schedule and within your budget.

Higher Interest Rates and Risk:
Construction loans typically have higher interest rates because unlike traditional loans, they are not backed by collateral since the property has not been built yet. They are also viewed as being riskier because the loan must be paid in full at the end of the term. You as the borrower must be sure you will have the funds to pay off the loan, and the lender has to trust that you will as well.

Harder to Qualify:
Since construction loans are more flexible compared to traditional loans, lenders aren’t handing them out left and right. Generally, borrowers will need to have good creditworthiness and enough money set aside for the down payment and reserves.

Give us a call, or fill out our Contact Us form, and we’ll start the process 

We have several other commercial real estate loans, many with less stringent requirements. We can definitely get you financed so you can see your project to completion.