Ground-up construction financing for experienced builders. Up to 85% loan-to-cost with milestone-based draws and financed interest reserves.
New construction loans provide ground-up financing for real estate investors and builders who are constructing residential properties from the foundation up. Unlike rehab loans that fund renovations to existing structures, new construction financing covers land acquisition, site development, vertical construction, and all associated costs to deliver a completed property.
The new construction program through LendingLeaders is built for experienced builders who have at least one completed project in the last 36 months. We understand the unique challenges of ground-up building, including the need for milestone-based draw schedules, financed interest reserves, and the flexibility to manage changing construction timelines. With loan amounts from $150,000 to $5,000,000 and up to 85% loan-to-cost, our program gives builders the leverage to take on projects without tying up excessive capital.
| Term | Details |
|---|---|
| Loan Amount | $150,000 - $5,000,000 |
| LTC (Loan-to-Cost) | Up to 85% of total project cost |
| ARV Cap | Up to 70% of after-completion value |
| Interest Rate | 9.50% - 9.99% |
| Loan Term | 12 - 24 months |
| Minimum FICO | 680 |
| Experience Required | Minimum 1 completed project in last 36 months |
| Interest Reserve | Financed into the loan |
| Draw Schedule | Milestone-based, aligned with construction phases |
| Property Types | Single-family, townhome, 2-4 unit |
| Geographic Coverage | 46+ states |
Loan-to-cost (LTC) is the primary metric in construction lending. It measures the loan amount as a percentage of total project cost, which includes land, hard costs (materials and labor), and soft costs (permits, architectural plans, engineering).
LTC = Loan Amount / Total Project Cost
For example, if your total project cost is $500,000 (including $120,000 for land and $380,000 for construction), an 85% LTC loan would be $425,000. You would bring $75,000 in equity to the deal.
The loan is also capped at a percentage of the after-completion value (typically 70% ARV), so both the cost basis and the projected value are evaluated.
New construction financing is available to builders and investors who meet these criteria:
A minimum FICO score of 680 is required, and your track record of completed projects is a key factor in underwriting. Detailed plans, permits, and a realistic budget will strengthen your application.
Start at LendingLeaders.com/apply with your project details: lot address (or lot under contract), architectural plans, itemized construction budget, project timeline, and your builder resume (completed projects with addresses, dates, and sale prices or values).
Our construction lending team reviews your plans, budget, and track record. We order an appraisal based on the proposed plans and specifications to establish the after-completion value. Underwriting evaluates the LTC, ARV cap, your credit profile, and your construction experience.
Once approved, we finalize the draw schedule, which is aligned with construction milestones. The interest reserve is built into the loan so you are not making out-of-pocket interest payments during construction. Closing typically takes 3 to 4 weeks from a complete application.
As construction progresses, you submit draw requests at each milestone. An inspector verifies the completed work and confirms it aligns with the approved plans and budget. Funds are released within 3 to 5 business days of inspection. A typical draw schedule includes 4 to 6 milestones covering foundation, framing, mechanical rough-in, drywall, finishes, and final completion.
Once construction is complete and the certificate of occupancy is issued, you execute your exit strategy. For spec builders, that means listing and selling. For investors building to rent, you refinance into a DSCR loan for permanent financing. Either way, the construction loan is paid off and you move to your next project.
Tom is a licensed contractor who builds two to three spec homes per year in suburban Atlanta. He purchased a lot for $85,000 and has a total construction budget of $315,000 for a 2,400 square foot home. Comparable new builds in the area sell for $580,000 to $620,000.
LendingLeaders provided a new construction loan at 85% LTC, covering $340,000 of the $400,000 total project cost. Tom brought $60,000 to the table. The interest reserve was financed into the loan, so Tom made no out-of-pocket interest payments during the 9-month build. He listed the completed home at $595,000, sold it in 45 days, and netted approximately $155,000 after all costs.
Priya owns a portfolio of 12 rental properties and wants to add new construction to her strategy. She acquired a lot in a growing rental market for $65,000 and plans to build a 3-bedroom home for $235,000 in total construction cost. The completed home will appraise for approximately $420,000 and rent for $2,800 per month.
LendingLeaders financed 85% of the $300,000 total cost ($255,000). Priya completed construction in 10 months, obtained a certificate of occupancy, leased the property at $2,850 per month, and refinanced into a 30-year DSCR loan through LendingLeaders at 75% of the appraised value. She recovered nearly all of her capital and added a cash-flowing new asset to her portfolio.
Kevin and Raj partner on infill development projects, building duplexes on vacant urban lots. They purchased a lot for $110,000 and have plans for a two-unit property with a total construction budget of $440,000. Each unit will be approximately 1,200 square feet, and the completed duplex is projected to appraise at $780,000.
LendingLeaders provided a construction loan covering 85% of the $550,000 total project cost ($467,500). The draw schedule aligned with six milestones, and the financed interest reserve eliminated monthly out-of-pocket payments. The project completed in 14 months. Kevin and Raj listed both units for sale as condos, selling them for a combined $760,000 and netting roughly $120,000 in profit after all costs.
A new construction loan disburses funds at predetermined milestones rather than as a lump sum. Here is a typical draw schedule for a single-family ground-up build:
| Draw | Milestone | Typical % of Construction Budget |
|---|---|---|
| Draw 1 | Foundation complete | 15% - 20% |
| Draw 2 | Framing and roof complete | 20% - 25% |
| Draw 3 | Mechanical rough-in (plumbing, electrical, HVAC) | 15% - 20% |
| Draw 4 | Drywall and insulation complete | 10% - 15% |
| Draw 5 | Interior finishes (cabinets, flooring, fixtures) | 15% - 20% |
| Draw 6 | Final completion and certificate of occupancy | 10% - 15% |
Each draw request triggers a third-party inspection. Once verified, funds are released within 3 to 5 business days. This structure ensures that funds are disbursed in proportion to work completed and protects both the builder and the lender.
A completed project means a ground-up construction that you served as the builder, general contractor, or developer on. It must have been completed (certificate of occupancy issued) within the last 36 months. Gut renovations may count in some cases. Provide addresses, completion dates, and photos or sale records.
Instead of making monthly interest payments during construction, the interest cost is estimated and built into the loan amount. As interest accrues each month, it is drawn from the reserve. This means you do not make out-of-pocket payments during the construction period, which preserves your cash for the project itself.
If your project runs beyond the original term, you can request a loan extension. Extensions are evaluated based on project progress, remaining work, and your plan to complete. Having a realistic timeline from the outset and communicating proactively about delays will support extension requests.
In most cases, you need to be a licensed general contractor or have a licensed GC managing the project. Owner-builder arrangements may be considered on a case-by-case basis, particularly for experienced investors with a strong track record.
Cost overruns are the builder's responsibility. The loan funds the approved budget, so any costs above that must come from your own capital. This is why having a detailed, realistic budget with appropriate contingency reserves (typically 5-10%) is critical.
Yes. The new construction loan covers both the lot acquisition and the vertical construction. If you already own the lot, its value counts toward your equity contribution in the deal.
Each draw request triggers a third-party inspection to verify that the work claimed has been completed and aligns with the approved plans. Inspections typically happen within 2 to 3 business days of a draw request. You should also maintain all required municipal inspections (foundation, framing, mechanical, final) on your own schedule.
Yes. Experienced builders can finance multiple projects simultaneously. Each project is underwritten and funded independently based on its own merits, your track record, and your capacity to manage concurrent builds.
Spec builders typically sell the completed home and pay off the construction loan from sale proceeds. Build-to-rent investors refinance into a long-term DSCR loan based on the property's rental income. Both strategies are common, and LendingLeaders can finance both the construction phase and the permanent financing phase.
Ground-up construction requires a lender who understands the build process and can move at your pace. With up to 85% loan-to-cost, financed interest reserves, and milestone-based draws, LendingLeaders gives builders the leverage and flexibility to deliver profitable projects.
Apply Now — Submit your project details and builder resume. Get a term sheet within 48 hours and start building with a lender who understands construction from the ground up.