Ground-up construction financing funds a build from the dirt up — land, materials, and labor — through staged draws. Here's how the structure works, what leverage to expect, and what builders need to qualify.
A ground-up construction loan finances building a property from scratch, releasing funds in staged draws as the project hits milestones, usually with interest-only payments on drawn funds. Expect leverage based on loan-to-cost (LTC) — often up to around 90% of total project cost from the more aggressive lenders — with the loan amount also constrained by the projected after-build value (LTARV).
LendingStreet places ground-up construction across capital sources with custom terms by project — single-family, small multifamily, and build-to-rent — matching the builder's experience and the deal's structure to the right lender.
A builder in Pennsylvania needed ground-up construction financing in the $200K-$500K range for a purchase-plus-build project. The deal was matched to a construction source whose draw schedule and LTC fit the project's scope and the builder's experience level. Ground-up financing lives or dies on draw speed and the right lender match — a build stalls if draws are slow, so pairing the project with a source that funds draws quickly is the whole game.
Construction loans are sized on loan-to-cost (LTC) — total project cost including land and build — rather than current value. The most aggressive national lenders reach up to about 90% LTC for qualified builders, with the loan also capped against projected after-build value (LTARV).
No. Funds release in staged draws as the project completes milestones like foundation and framing, with inspections between draws. You typically pay interest only on the funds actually drawn, which keeps carrying costs down during the build.
Most construction lenders want to see prior completed projects, and stronger track records unlock higher LTC and better pricing. LendingStreet can match less-experienced builders to sources with appropriate terms.
A detailed line-item scope of work and budget, entitled and ideally shovel-ready land (permits in place or a clear path), plus standard credit and reserves. The lender funds draws against your costed scope.
Yes. LendingStreet places ground-up construction across capital sources with custom terms by project — single-family, small multifamily, and build-to-rent — matching the builder's experience and deal structure to the right lender.
Ground-up construction placed across capital sources with fast draws and custom terms. See your leverage on a build project.
Get Pre-Qualified → Browse Loan ProgramsMore investor content on similar topics