New construction in the Wilmington area splits in two: infill on vacant city lots, many sold through the Wilmington land bank, and subdivision building south of the canal around Middletown and Bear. Both can work for investors with plans, permits and a builder who has done it before.
In short: LendingStreet finances ground-up construction for 1-8 unit investor projects in Wilmington and New Castle County, including spec homes, build-to-rent houses, infill duplexes and fourplexes and small 5-8 unit buildings. Loans are sized on loan-to-cost with terms set per project, and funds are released through a draw schedule after inspections. Approved plans, permits, a detailed budget and builder experience matter most.
In the city, infill happens on vacant lots and teardown sites in neighborhoods such as the East Side, the West Side, Hilltop and Southbridge, where new rowhome-style houses and duplexes can fill gaps in existing blocks. The land bank sells properties to buyers with a redevelopment plan, which can give a builder a lower land basis.
In the suburbs, most new building is south of the Chesapeake and Delaware Canal in Middletown, Townsend and the Bear area, where newer subdivisions have drawn families and renters. North of the canal, teardown and rebuild in Brandywine Hundred and around Hockessin suits higher-value spec homes.
Infill lots in the city are often narrow and deep, sized for rowhomes. That shapes the product: two- or three-story attached or semi-attached houses, side-by-side duplexes on doubled lots and stacked two-unit buildings. Check the lot width against zoning setbacks before you design.
Construction lending is about the plan as much as the property. A complete package includes:
A clear exit strategy belongs in the package too: who buys the finished home, or what it rents for, and how those figures were estimated.
This example is illustrative and not a quote. A builder buys a vacant lot for $45,000 and plans a new side-by-side duplex with $430,000 of hard costs and $40,000 of soft costs such as permits, design and utility connections. Total cost is $515,000. At 80% loan-to-cost, the loan is $412,000, released in draws.
At completion the duplex appraises at $600,000 and both units lease for $2,250 each. A DSCR refinance at 75% LTV, $450,000, pays off the construction loan. Estimated principal and interest is about $3,146, taxes $430 and insurance $190, for a payment of about $3,766 and a DSCR of about 1.19x.
| Draw stage | Share of hard costs | Amount |
|---|---|---|
| Foundation and site work | 15% | $64,500 |
| Framing and roof | 25% | $107,500 |
| Mechanical, electrical, plumbing rough-in | 20% | $86,000 |
| Insulation, drywall, windows | 15% | $64,500 |
| Finishes and final inspection | 25% | $107,500 |
You or your builder request a draw when a stage is finished. An inspector confirms the work, and funds are released for that stage. Keep cash on hand to cover work before each draw. The construction draw schedule calculator helps you map stages to cash needs.
Plan for inspection timing too. Each draw waits on an inspection, so build a few days per stage into your schedule. Subcontractors who expect payment on completion need to know the draw calendar in advance.
Inside city limits, plans go through Wilmington's Licenses and Inspections and zoning review; projects in historic districts may need design approval. County projects go through New Castle County Land Use. In fast-growing areas south of the canal, sewer capacity and connection fees can affect both budget and timeline, so confirm them before closing on land.
Delaware's 2025 reassessment also matters for the finished product: estimate taxes on the completed value when you test the DSCR refinance.
Raw land with no plans or permits, a first project by a borrower with no build record and no experienced general contractor, and projects over 8 units fall outside residential construction lending. Larger buildings are commercial loans; see the multifamily page.
If you are earlier in the process, work with an architect and engineer to get plans to permit-ready status and line up a licensed general contractor before applying. That preparation is what turns a concept into a financeable project.
Construction costs in northern Delaware track the broader Philadelphia and Baltimore region, and good subcontractors book up during the spring and summer building season. A realistic schedule includes permit review, utility connection, weather delays in winter and time for final inspections and a certificate of occupancy.
Contingency matters. Budgets with a 5% to 10% contingency line handle the normal surprises, such as poor soils, unexpected rock, utility relocation or price changes on windows and framing lumber. Interest accrues on drawn funds while you wait, so delays cost money even when the budget holds.
A spec home in Middletown or Hockessin usually exits by sale. A duplex or fourplex in the city, or a group of build-to-rent houses, usually exits into a DSCR loan once leased. Decide before you build, since the finish level, unit mix and parking plan differ for each.
On build-to-rent, test the DSCR refinance with the post-reassessment tax rate applied to the finished value and a current insurance quote for new construction, which is often lower than for older homes nearby.
Send the site address, plans, budget, schedule and builder resume. Our investor loans are business-purpose loans on non-owner-occupied property. Call (877) 298-1001 or use the form below.
Include the land purchase date and price if you already own the lot.
On loan-to-cost: a share of land, hard and soft costs, with terms set per project based on the plan, the builder and the exit.
Yes, if you have plans, permits and a builder. The land bank sells to buyers with a redevelopment plan, and its terms are separate from ours.
Through a draw schedule. Each stage is inspected before funds for that stage are released.
Yes. Duplexes, triplexes, fourplexes and small 5-8 unit buildings are eligible, and a DSCR loan can refinance them once leased.
Usually only with an experienced general contractor and a strong plan. A first-time builder with no experienced contractor typically does not qualify.
Yes. Middletown, Townsend, Bear and the rest of New Castle County are in our area, along with Kent and Sussex counties.
Not on residential construction, which covers up to 8 units. Larger projects are commercial loans.
Terms are set per project to fit the build schedule plus time to sell or refinance. Ask about extension options before you start.
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