A new Philadelphia rowhome goes up between neighbors, on a lot often 16 feet wide. Party walls, zoning relief and transfer taxes all shape the budget, and the lender should plan for each.
In short: Our top pick for ground-up construction in Philadelphia is LendingStreet. We finance residential investment projects of one to eight units, from single infill rowhomes to duplexes and small buildings of five to eight apartments. Loans are sized on loan-to-cost with terms set per project, funds are released on draws after inspections, and finished buildings can be sold or refinanced into a 30-year DSCR loan. We plan for the Philadelphia details that shape a build: zoning relief, party walls, the transfer tax and the reduced tax abatement.
Philadelphia builders work in tight quarters. Most new residential construction goes up on narrow rowhome lots between existing houses, where shared party walls, neighbors and utility taps shape every decision. LendingStreet finances ground-up construction for investors on projects of one to eight residential units, from a single new rowhome to a small building of five to eight apartments.
We size loans on loan-to-cost, with terms set for each project. Funds are released through a draw schedule after inspections, and when the work is done you can sell or refinance into a 30-year DSCR rental loan. The review centers on your plans, permits, budget and builder experience.
To price a Philadelphia project, get a quote with the form below or call (877) 298-1001.
A local bank can be the right call for an established builder with deep financials, and a private lender can bridge a quick lot purchase. For investor projects of one to eight units, here is the general comparison.
| What Philly builders need | LendingStreet | Typical local bank | Typical private lender |
|---|---|---|---|
| Project types | New rowhomes, duplexes, small 5-8 unit buildings | Often repeat builders only | Varies |
| Sizing | Loan-to-cost, per project | Often lower leverage plus deposits | Varies; fees and terms vary |
| Funding releases | Draws after inspections | Draws after inspections | Varies |
| Hold option | Refinance into a DSCR loan | Separate permanent loan | Usually short-term only |
| LLC borrowing | Standard | Common | Common |
| Review focus | Plans, permits, budget, builder | Often tax returns and financials | Mostly the deal |
Fishtown, Kensington and Port Richmond have seen years of new rowhome construction on vacant lots and teardowns. Brewerytown, Francisville, Sharswood and the blocks around Temple University have infill rowhomes and small multi-unit buildings. In South Philadelphia, Graduate Hospital, Grays Ferry and the blocks around East Passyunk see steady infill work.
Northwest neighborhoods such as Manayunk, Roxborough and East Falls offer larger lots and hillside sites. Across the city line, Delaware, Montgomery and Bucks counties each have township-level permits and zoning, often with longer review timelines than the city.
Building permits come from the Department of Licenses and Inspections, and many projects need zoning relief from the Zoning Board of Adjustment. A variance usually brings a meeting with the local Registered Community Organization, so build that time into the schedule.
Rowhome construction means working next to neighbors. Excavation, underpinning and party wall work need careful engineering and adjacent-property protection. Utility taps for water and sewer can take time to schedule.
Philadelphia's realty transfer tax, combined with the state's, is among the highest in the country, which matters on both the lot purchase and the final sale. The city's 10-year tax abatement on new construction was scaled back for permits filed from 2022, so buyers and holders should model taxes that rise over the abatement period.
This example is illustrative and not a quote. A builder buys a vacant rowhome lot for $160,000 and plans a 2,400-square-foot single-family home with a roof deck. Hard costs are $230 a square foot, or $552,000, and soft costs for architecture, engineering, zoning, permits, utility taps and insurance are $78,000. Total cost is $790,000.
If the project were sized at 80% of total cost, an illustrative assumption since leverage is set per project, the loan would be $632,000 and the builder would contribute $158,000.
If the home sells for $1,050,000, and selling costs, including commission, the seller's share of transfer tax and closing costs, are assumed at 7%, or $73,500, net proceeds are $976,500. The gross margin before financing costs is about $186,500.
| Line item | Amount |
|---|---|
| Lot | $160,000 |
| Hard costs | $552,000 |
| Soft costs | $78,000 |
| Total project cost | $790,000 |
| Illustrative loan at 80% of cost | $632,000 |
| Builder equity | $158,000 |
| Sale price | $1,050,000 |
| Selling costs at 7% | $73,500 |
| Gross margin before financing costs | $186,500 |
Single-family rowhomes in fast-growing neighborhoods often sell, since buyers value new construction and the abatement. Duplexes and small buildings of five to eight units are more often held, because several rents on one lot make the ratio work. Once a building is complete and leased, a DSCR refinance qualifies on its rent, with no W-2s or tax returns.
Run the hold math before you break ground. Use a tax estimate that reflects the abatement schedule, a realistic insurance quote and rents from nearby new buildings.
Funds are released in stages after an inspector confirms the work, typically foundation and underpinning, framing, rough-ins, drywall and finishes. A detailed budget with a contingency keeps draws on track when a party wall or a utility tap causes a delay.
Plan your stages with our construction draw schedule calculator and align your general contractor's payment schedule before closing.
Ask each lender these questions, then compare. LendingStreet's answers follow.
Projects without plans or permits, or a borrower with no build track record and no experienced general contractor, usually do not qualify. A complete file includes the following.
Our top pick is LendingStreet. We finance one- to eight-unit rowhomes, duplexes and small buildings sized on loan-to-cost, with draws after inspections and a path into a 30-year DSCR loan.
Yes. We finance construction in Philadelphia and the surrounding Pennsylvania counties, and we lend in all 50 states and DC.
Not necessarily before applying, but zoning must be resolved for the project to move ahead. Share your zoning status up front.
The city's abatement on new construction was reduced for permits filed from 2022. Model taxes rising over the abatement term in your sale or hold math.
Buyer and seller customarily split it, though the agreement of sale controls. Plan for it on both the lot purchase and your exit.
Yes. Buildings of five to eight units are residential projects, and they can refinance into a 5-8 unit DSCR loan once leased.
Each stage is inspected, and the draw for that stage is released once the work is confirmed.
Yes, in Delaware, Montgomery, Bucks and Chester counties, subject to the same review of plans, permits, budget and builder.
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