Boston was built on the three-decker, and new versions of that small multifamily form are still among the most practical investor builds in the city. Tight lots, zoning relief, a stricter energy code, ledge and a short excavation season all push costs up, which makes the financing structure matter even more.
In short: LendingStreet is our top pick for ground-up construction in Boston. We finance investor builds of 1 to 8 units, including new two- and three-family homes, townhomes, ADU projects and small 5-8 unit buildings. Loans are sized on loan-to-cost with terms set per project, draws are released after inspections, and LLC borrowers are standard. Finished rentals can refinance into a 30-year DSCR loan qualified on rent, with no W-2s or tax returns. Get a quote with the form below or call (877) 298-1001.
LendingStreet is built for investors who build to hold. In Greater Boston, where a new three-family can take a long time to approve and build, having the construction loan and the long-term DSCR loan with the same investor lender keeps the plan simple from day one.
We size each loan on loan-to-cost and set terms around the project's plans, permits, budget and builder experience. Draws are released after inspections, so funds follow progress on site.
To start, send your site and plans through the form below or call (877) 298-1001.
Inside the city, most investor construction happens on infill lots in Dorchester, Roxbury, Mattapan, Hyde Park, Roslindale, East Boston, Jamaica Plain and parts of Brighton, often replacing a tired single-family or filling a vacant parcel between existing triple-deckers.
Nearby, Quincy, Malden, Medford, Everett, Chelsea, Revere, Lynn and Brockton offer somewhat lower land costs. State law now requires many communities served by the MBTA to zone for multifamily housing near transit, which is opening new sites for small buildings.
Building permits in Boston are issued by the Inspectional Services Department. Many small residential projects need zoning relief from the Zoning Board of Appeal for issues such as lot size, setbacks or parking, and the process includes community meetings. Build that time into the schedule.
Boston has adopted Massachusetts' stricter opt-in energy code, which shapes design choices around insulation, heating systems and electrification and affects hard costs. State law also now allows ADUs by right in many single-family zones, subject to size and other limits.
Ledge, tight access and neighbor protections can raise site costs, and winter limits excavation and foundation work.
A look at LendingStreet next to the lender types Boston builders usually weigh. Other lenders' terms vary, so treat their columns as typical rather than universal.
| What matters on a build | LendingStreet | Community bank or credit union | Local hard money lender |
|---|---|---|---|
| Who the program is for | Real estate investors and builders, 1-8 units | Broad mix of consumer and business customers | Investors needing short-term money |
| Leverage basis | Loan-to-cost, set project by project | Often conservative, tied to the full banking relationship | Varies, fees and terms differ widely |
| New three-family rentals | Yes, built for investors with a DSCR exit | Varies; often relationship-based | Short-term only |
| Paperwork focus | The project: plans, permits, budget, builder track record | Often personal and business tax returns | Varies by lender |
| Title in an LLC | Standard | Sometimes, depends on the bank | Usually |
| Funding the build | Inspection-based draw schedule | Varies by bank | Varies; some hold back large reserves |
| Long-term rental loan | DSCR refinance with no W-2s or tax returns | Usually needs income documentation | Rarely offered |
| Footprint | Nationwide, all 50 states and DC | Mostly local | Often one metro or state |
This example is illustrative and not a quote.
An investor buys an infill lot in an outer neighborhood for $450,000 and builds a new three-family. Hard costs are $1,250,000 and soft costs, including architecture, engineering, zoning counsel, permits and energy code work, are $220,000, for $1,920,000 in total. In this illustration the loan is sized at 75% of cost, $1,440,000, and the investor brings $480,000. Hard costs fund in about 6 draws of roughly $208,333 after inspections.
Finished, the building is valued at $2,450,000 and each unit rents for $4,000, or $12,000 a month. At the full $1,440,000, the DSCR would be about 0.97x. Paying down $150,000 to a $1,290,000 DSCR loan, about 52.7% of value, gives estimated principal and interest of $8,691, taxes of $2,205 and insurance of $517, a total of $11,413 and a DSCR of about 1.05x.
Boston's residential exemption applies only to owner-occupants, so an investor-owned building pays the full residential rate. Confirm the expected bill for the finished building with the city's Assessing Department.
Massachusetts charges a deed excise tax on sales, which matters on a sale exit. Boston requires rental units to be registered with the city and subject to inspection, so include that in your lease-up plan. Winter storms and older neighboring buildings make good builders risk coverage important.
Ask these questions of every lender you consider:
LendingStreet's answers: loans are sized on loan-to-cost with terms set per project, and leverage can be lower on larger balances or 5-8 units, which varies by program. Draws are released after inspections on a schedule set at closing. We want builder experience or an experienced general contractor, LLC borrowers are standard, and the finished building can refinance into a DSCR loan with a 1.0x standard minimum and seasoning that varies by program.
We move quickest on projects with zoning relief granted or not needed, permits issued or in review, a line-item budget with contingency and a builder who has delivered similar multifamily work in the area. Projects without plans or permits, or with no build track record and no experienced general contractor, usually do not qualify.
Projects of 9 or more units are commercial. For 1-8 unit builds in Boston and the surrounding communities, get a quote with the form below or call (877) 298-1001.
Our top pick is LendingStreet. We finance 1-8 unit investor builds such as new three-families on loan-to-cost, release draws after inspections, lend to LLCs and can refinance the finished building into a 30-year DSCR loan.
Yes. We lend in Boston, the surrounding communities, all of Massachusetts and all 50 states and DC, on non-owner-occupied investment property.
Generally, yes. We want the approvals the project needs, including any zoning relief, in place or close to it before construction funds are released.
It affects the budget, not the program. A realistic hard-cost budget that reflects the code helps the loan size correctly.
After each stage of work, an inspection confirms progress and the draw for that stage is released. Our draw schedule calculator helps you plan stages.
Yes. It qualifies on combined rent, with no W-2s or tax returns. The standard minimum DSCR is 1.0x and the minimum credit score is 620.
Yes. We treat 5-8 unit buildings as residential investor projects. Leverage can be lower than on 1-4 units and varies by program.
Experience matters. If you have not built before, an experienced general contractor is usually required.
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