Construction Loans 2019-02-25T18:51:26+00:00

Construction Loans

Financing for your Construction Projects

We can help you finance the purchase of your investment property, as well as finance the construction.

Construction Loans can allow you to:

  • Not become over leveraged with your own personal finances on a particular project, giving you more peace throughout the project.
  • Leverage your finances into other projects, empowering you to make more with what you have.
  • Complete the project with much more ease and less paperwork than a construction loan with a traditional bank would allow.

Standard terms for Construction loans (some transactions may vary)

  • Purchases are funded at 80% Loan to Value (LTV) or Loan to Cost (LTC), whatever is lower.
  • Renovation financing is typically set at 75% LTC, but draws are contingent upon Unpaid Principal Balance of the loan remaining under 80% LTV at sole discretion of the lender.

Loan Amounts Loan To Cost (LTC) for Renovations Loan Terms Draw Fees PrePayment Penalty
$75,000 – $2,250,000 75% LTC – some transactions may vary Up to 12 months – extensions available None None

  • We will add in an additional 20% cushion towards your loan amount that can be utilized at our discretion if costs happen to have increased. Minimum interest is not charged on this amount, interest is only charged if it is drawn.
  • Borrowers must first spend money towards building the property, then a draw can be requested where we will reimburse based on hard costs / materials installed in the property. We are unable to lend on deposits for materials that have not yet been installed onto the property.
  • On projects with a budget of more than $80,000, we request that at least $50,000 is spent each time before a draw request is made.

Here are the items we request to process a draw:

  • Invoices for items over $1,000
  • Lien waivers for items over $5,000
  • Spreadsheet or document showing a line item breakdown of costs spent for the draw
  • An estimated cost to complete the project
  • We will either request pictures or conduct an inspection of the property verifying the items installed.

Subdivision Loan Guidelines:

  • We require to be the only lender in the subdivision
  • Funds are lent at 80% of purchase price, and 75% LTC of horizontal and vertical improvements (we cannot lend on carrying costs, insurance, HOA setup, and other non-direct improvements).
  • Trustor may sell individual lots and beneficiary will grant a partial release of the lot for 133% of each lot’s pro rata share of the original Deed of Trust amount based on each lot’s value as a percentage of the value of all lots as determined by the Beneficiary.
  • Our partial release clause for each lot (meaning lender will release one of the parcels upon a paydown on the loan) in the amount of percentage of collateral times 1.33.
    • For example: if $1,000,000 Deed of Trust loan with 4 lots that were the same lot size, home size, and final value, then each collateral value would be worth $250,000. Each lot would be released for $332,500 ($250,000 * 1.33 = $332,500).
    • That means the developer profit would come out later in the project.
  • If the lots and homes are different value, we prorate based on lot/home size/value.
I want to discuss financing my next construction project!

Contact us to see if we can help you overcome an obstacle and achieve your goals. 

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Klinkloans Fund is a part of the Private Lending Division of Stewardship Mortgage