Boston has very little vacant land, so most new residential investment here is infill: a new two- or three-family on a lot that held a tired single, a modern take on the triple-decker, or a small building on a corner parcel near a T stop.
In short: LendingStreet finances ground-up residential construction in Boston for investors building 1 to 8 units, including infill two- and three-families, new triple-deckers, townhomes and small 5-8 unit buildings. Loans are sized on loan-to-cost, with terms set per project, and funds are released through inspected draws. Approved plans, a realistic budget and an experienced builder matter more here than almost anywhere, because zoning relief and permitting can take time.
Boston's housing stock is old, dense and dominated by two- and three-family buildings in neighborhoods like Dorchester, Roxbury, Jamaica Plain, East Boston, Hyde Park, Roslindale and Mattapan. Demand from students, hospital workers and young professionals keeps rental occupancy strong, and new units with modern systems compete well against century-old housing.
Because land is scarce, the typical project replaces an obsolete structure or fills an odd-shaped lot. That means demolition, utility work and neighbor relations are part of the budget from day one.
Common 1-8 unit project types we see in and around Boston: Each type has its own exit and its own local issues.
| Project type | Where it is common | Local note |
|---|---|---|
| New two- or three-family | Dorchester, Roxbury, Mattapan, Hyde Park | Often needs zoning relief on lot size, setbacks or parking |
| Townhome row | Roslindale, West Roxbury edges, Brighton | Party walls and fire separation drive cost |
| Small 5-8 unit building | Near transit in East Boston, JP, Dorchester | Larger review; budget extra time |
| Spec single-family | West Roxbury, Hyde Park, nearby suburbs | Fewer lots available; teardown value matters |
Many Boston lots do not meet current dimensional rules for the building an investor wants, so projects often go to the Zoning Board of Appeal for variances or conditional use. That process can include community meetings and abutter input, and the timeline is hard to predict. Larger projects can also trigger review by the city's planning agency.
Building permits run through the Inspectional Services Department. Massachusetts energy code requirements are stricter than in many states, and Boston has adopted tougher local energy standards for new construction, so insulation, mechanical systems and electrification choices belong in the budget early. Confirm which code applies to your permit date.
Lenders generally want zoning settled before closing. A project still waiting on a ZBA hearing is usually a candidate for land or bridge financing first, with construction financing once relief is granted.
Parts of Boston sit on ledge and glacial fill, and excavation can turn up rock, old foundations or contaminated soil. Older lots may also have abandoned oil tanks. A soils report and a demolition plan protect the budget.
Winter weather slows foundation and exterior work, so many builders plan to be weathertight before December.
Construction loans are sized on loan-to-cost (LTC): the loan as a share of the total project budget, including land, hard costs, soft costs and contingency. Terms are set per project, so the percentage depends on the plans, the budget, the location and your experience.
The finished value matters too. A Boston budget that works on cost but leaves little margin against the expected sale price or appraised value will usually be sized down, because the exit has to work.
This example is illustrative and not a quote. An investor builds a new three-family on a Dorchester infill lot as a long-term rental. Land costs $450,000, hard costs are $1,050,000, soft costs are $150,000 and the contingency is $75,000, for a total project cost of $1,725,000.
At a sample 80% loan-to-cost, the loan is $1,380,000 and the investor puts $345,000 into the project. Most of the loan funds through draws as work is completed.
Once the three units lease for a combined $10,200 a month and the property appraises at $1,950,000, a DSCR refinance at 75% LTV would be $1,462,500, enough to repay the $1,380,000 construction balance. The rent then has to cover the new payment, including taxes and insurance, at the program's DSCR minimum.
| Item | Amount |
|---|---|
| Land | $450,000 |
| Hard construction costs | $1,050,000 |
| Soft costs (plans, engineering, permits, fees) | $150,000 |
| Contingency | $75,000 |
| Total project cost | $1,725,000 |
| Loan at a sample 80% LTC | $1,380,000 |
| Investor cash in the project | $345,000 |
| Monthly rent at completion | $10,200 |
| Completed value | $1,950,000 |
| DSCR refinance at 75% LTV | $1,462,500 |
Each draw follows an inspection. When a stage is finished, you request funds, an inspector verifies the completed work and the money for that stage is released to keep the job moving.
A draw schedule that matches the real sequence of a Boston build avoids cash gaps. Front-loaded schedules and vague line items slow approvals, so tie each draw to work an inspector can see.
A complete package gets a faster, clearer answer. Lenders generally pass on projects without plans or permits, and on borrowers with no build track record and no experienced general contractor.
If you are newer to building, pairing with a general contractor who has finished similar Boston projects can make the difference. Their resume, licenses and recent projects become part of your file.
Every construction loan needs a clear exit. Spec builders sell the finished property. Build-to-rent investors lease it up and refinance into a DSCR loan that qualifies on the property's rent, with no W-2s or tax returns, a 620 minimum credit score, LLC borrowers standard and 30-year terms available.
If a sale takes longer than planned, a leased property can still refinance into a DSCR loan, so it helps to design a home that would also rent well in Boston.
Our investor loans are business-purpose loans on non-owner-occupied property. Send your Boston plans, budget and land details through the form below, or call (877) 298-1001, and we will come back with how the project can be sized.
Usually, if the project needs zoning relief. Lenders generally want the variance or conditional use granted, and the appeal period handled, before funding construction. Until then, land or bridge financing is the more common fit.
Yes, if the lot is zoned for it or you obtain relief. New three-families are a common investor project in Dorchester and nearby neighborhoods, and they can refinance into a DSCR loan once leased.
Yes. Massachusetts and Boston energy requirements for new construction are stricter than in many states. Have your architect confirm the applicable code and price the mechanical and envelope work before you set the budget.
Yes. We finance investor construction across Greater Boston, including inner suburbs where lot sizes and zoning differ from the city. Each town has its own permitting office and rules.
In most cases, yes, or approved plans with a clear path to permit. Projects without plans or permits usually do not qualify.
Through a draw schedule. Each stage of work is inspected before funds for that stage are released.
Yes. Once the property is leased, a DSCR loan can pay off the construction loan, qualifying on rent with 30-year terms available.
No. Our investor loans are business-purpose loans on non-owner-occupied property.
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