New York is really several building markets: New York City's dense infill, Long Island and the Hudson Valley suburbs, and lower-cost upstate cities such as Buffalo, Rochester and Albany. The best construction lender for your project depends on which one you are in.
In short: LendingStreet finances ground-up construction for real estate investors in New York on 1-8 unit residential projects, including spec homes, build-to-rent homes and infill duplexes, sized on loan-to-cost with funds released through inspected draws. The best lender for your build is the one whose LTC, draw speed, interest reserve and experience requirements fit your plans, budget and builder. In New York, also ask how the lender handles the state's mortgage recording tax and the filing of building loan agreements under the Lien Law.
There is no single best construction lender for every New York project. The right one is the lender whose sizing, draw process and requirements fit your plans, your builder and your exit. We do not rank lenders by name; instead, compare offers on the same handful of terms.
Ask every lender for a written term sheet on the same budget, so you are comparing like with like.
Ask, too, how the lender handles a contingency line in the budget and whether unused contingency can be reallocated as the build moves along.
| What to compare | Why it matters | What to ask |
|---|---|---|
| Loan-to-cost (LTC) | Sets how much cash you bring | What share of land, hard and soft costs is covered? |
| Mortgage recording tax | Charged on the construction loan itself | Is the recording tax in the closing budget? |
| Land and equity | Owned land may count toward equity on some programs | How is land I already own treated? |
| Draw process | Slow draws stall subcontractors | Who inspects, and how fast are draws funded? |
| Interest reserve | Covers payments during the build | Is there a reserve, and how is it sized? |
| Experience rules | Decides whether you qualify | What track record or general contractor is required? |
| Term and extensions | Weather and permits cause delays | What happens if the build runs long? |
In New York City, ground-up investor projects are usually new two- to eight-unit buildings on infill lots in Brooklyn, Queens, the Bronx and Staten Island. On Long Island and in the Hudson Valley, investors build single-family homes and two-family homes.
Upstate, Buffalo, Rochester, Syracuse, Albany and the Capital Region have lower land costs and steady rental demand, with single-family, two-family and small multi-unit projects.
New York City projects go through the Department of Buildings, and zoning changes adopted in 2024 expanded what can be built in many areas. Outside the city, towns and villages run their own permits and zoning boards.
New York's Lien Law has specific rules for building loan agreements, which generally must be filed with the county clerk. Your attorney and the lender's title company will handle it.
Upstate snow loads and deep frost affect design. NYC lots often share walls with neighbors, so underpinning and protection of adjacent buildings add cost.
Coastal areas of Long Island and the city have flood zones with elevation requirements.
This example is illustrative and not a quote. An investor plans a new two-family in the Rochester suburbs. Land costs $60,000, hard costs are $520,000 and soft costs, including plans, permits and fees, are $55,000, for a total of $635,000. At a sample 80% loan-to-cost, the loan is $508,000 and the investor brings $127,000.
If draws average about half the loan over an 11-month build, interest comes to about $24,400. On completion the property appraises at $760,000 and rents for $5,050 a month. A DSCR loan sized to pay off the $508,000 construction balance works out to about 67% of value. On a 30-year term, principal and interest is about $3,465; with $1,300 a month in taxes and insurance, the payment is about $4,765 and DSCR is about 1.06x, above the 1.0x standard minimum.
| Item | Amount |
|---|---|
| Land | $60,000 |
| Hard costs | $520,000 |
| Soft costs (plans, permits, fees) | $55,000 |
| Total project cost | $635,000 |
| Loan at 80% LTC | $508,000 |
| Equity from investor | $127,000 |
| Estimated interest during build | About $24,400 |
| Completed value | $760,000 |
| DSCR loan to pay off construction | $508,000 |
| Monthly payment (P&I, taxes, insurance) | About $4,765 |
| DSCR at $5,050 rent | About 1.06x |
Each draw follows the same pattern: you request funds for completed work, an inspector visits the site, and the lender releases money once the inspection is approved. A clear draw schedule, agreed before closing, avoids disputes later.
Interest accrues on drawn funds only. An interest reserve can carry those payments until completion, but it is part of the loan and is counted in the cost. Upstate winters shorten the season, while NYC schedules are usually set by permits and inspections.
New York charges a mortgage recording tax on new mortgages, with higher rates in New York City, so your construction loan carries a significant tax at closing. The state transfer tax applies on sales, and NYC adds its own.
Property taxes are high in many parts of the state. Budget the finished-value tax if you plan to rent the building.
Ground-up loans are underwritten on the project and the team. Lenders want complete plans, issued or nearly issued permits, a line-item budget and a builder with a track record on similar homes.
Projects without plans or permits, or a borrower with no build track record and no experienced general contractor, usually do not qualify. For larger 9+ unit projects, see our commercial lending page.
Think about the exit before you break ground. If you plan to sell, ask how long the loan runs after completion and what an extension costs. If you plan to rent, run the DSCR math on expected rent, taxes and insurance now, because that refinance is what pays off the construction loan.
LendingStreet reviews New York ground-up projects on 1-8 unit residential investment property. Our investor loans are business-purpose loans on non-owner-occupied property. Get a quote with the form below or call (877) 298-1001.
Terms are set per project, based on the plans, budget, builder and exit.
Yes. New York charges a mortgage recording tax on new mortgages, with higher rates in New York City.
New York's Lien Law generally requires building loan agreements to be filed with the county clerk. The attorneys handle it at closing.
Yes. Upstate cities have lower land costs and steady rents, and lenders finance single-family, two-family and small multi-unit builds there.
You either sell the property and pay off the loan, or refinance into a long-term DSCR rental loan that qualifies on the property's rent.
An LLC is standard and recommended for business-purpose loans. Expect to sign for the loan personally as well.
No. Our investor loans are business-purpose loans on non-owner-occupied property.
It can help cash flow during the build. Ask how it is sized and whether it is enough if the schedule slips.
Construction loans are sized on loan-to-cost, a share of the land, hard and soft costs, with terms set per project. You bring the rest as equity, and some programs credit land you already own.
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