Construction / Ground-Up
From bare lot to certificate of occupancy.
Ground-up construction financing for custom homes, spec builds, and small developments, with interest-only draws during the build and a permanent takeout at completion.
What makes this loan different
- Land acquisition and vertical construction financed
- Interest charged only on funds drawn
- Single-close and two-close structures available
- Builder and owner-builder options
Who this is built for
- Custom home buyers with a lot and plans
- Spec builders running one to ten homes
- Infill developers and ADU projects
Single close versus two close
A single-close construction-to-permanent loan converts automatically into your long-term mortgage at completion, locking your rate up front and saving a second set of closing costs. A two-close structure separates the build loan from the takeout, which offers more flexibility if you expect rates to improve or plans to change.
Which is better depends on your timeline and your appetite for rate risk, and it should be decided before you buy the lot.
What lenders review
Plans, a detailed line-item budget, the builder's license, insurance and track record, the appraisal subject to completion, and your liquidity for cost overruns. Ten to fifteen percent contingency is standard.
What lenders typically ask for
- Complete plans and specifications
- A signed builder contract, with the builder's license, insurance, and financial information
- A detailed construction budget with a contingency line
- Evidence of land ownership, or the contract to acquire it
- Permits or evidence of the permitting path
- An as-completed appraisal, plus standard income, credit, and asset documentation
Requirements vary by lender and by file. This is a general picture of what is commonly requested, not a checklist for a specific loan.
Worth knowing
Cost overruns are the borrower's problem.
Lenders fund to the approved budget. Materials pricing, change orders, and site surprises above that figure generally come out of the borrower's pocket, which is why a real contingency matters more here than anywhere else.
Interest accrues on what has been drawn.
Payments during construction are typically interest-only on the outstanding balance, rising as draws release. That growing carry runs alongside whatever housing the borrower is paying for in the meantime.
The permanent loan is a second approval.
Unless the program is a true single-close, converting to permanent financing means qualifying again — at whatever rates and guidelines exist then, not now. Single-close structures remove that risk and are worth asking about specifically.
The builder is underwritten too.
Builder experience, licensing, and financial condition are reviewed. A builder who cannot meet the lender's requirements ends the transaction regardless of the borrower's strength.
See what this program would take in your case.
We are brokers — this program is shopped across hundreds of wholesale lenders, not quoted off one rate sheet. A short application gives us enough to compare real options.
Program availability, terms, guidelines, and documentation requirements vary by lender and are subject to underwriting and change without notice. This is not a commitment to lend.