Construction Loans 2019-08-28T21:59:03+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 be for:

  • Bigger remodel / fix and flip projects
  • New build homes
  • Infill projects
  • Subdivisions

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

  • 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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