A ground-up construction lender wants to be convinced of five things: the land is secure, the project can legally be built, the budget is realistic, the people building it can do it, and there is a clear way to repay the loan. Everything you submit should answer one of those questions.
Our construction program covers ground-up and rehab projects, with loans up to 90% of construction cost, loan amounts up to $75 million, and conversion to a permanent loan at conventional rates on completion. Here is what we review and how to prepare.
1. The land
Construction starts with the site. We look at how you acquired it or plan to, what you paid, what liens exist, and whether title is clean. If you already own the land, its equity can matter to the structure of the loan. A title review is part of every file, and surprises there, such as easements or unresolved claims, can change the timeline. Our guide to title reports explains what to look for.
2. Plans and permits
A lender needs to know the project can be built as designed. Bring the plans, the permit status and a realistic schedule for what remains. A project with permits in hand reads very differently from one that still needs approvals, and the loan term has to leave room for delays. Be candid about open items. Unresolved permits are manageable when they are disclosed and scheduled; they are a problem when discovered late.
Key takeaways
- Lenders check five things: the land, plans and permits, the budget, the sponsor and contractor, and the exit.
- Up to 90% loan-to-construction-cost is the ceiling in our program, not a promise for every deal.
- Funds are released in stages as work is completed, so documentation habits matter throughout the build.
3. The budget
The budget is the heart of the file. A fundable budget separates hard costs (labor and materials) from soft costs (design, permits, fees, insurance, financing costs), includes a contingency, and ties every line to a bid or an estimate. Round numbers with no backup invite questions. We cover this in detail in our article on contingency and interest reserve, and the ratio itself is explained in loan-to-construction-cost explained.
4. Sponsor and contractor
We want to know who is responsible for delivering the project. For the sponsor, that means relevant experience, financial capacity to cover what the loan does not, and how the project is held. For the contractor, it means license status, similar completed work, and the contract terms. If you are building it yourself, be ready to explain how you will manage the work and the schedule.
Experience is not an absolute requirement for every deal, but gaps need an answer, such as a stronger contractor, a larger contingency or more of your own capital in the project.
5. Draws and oversight
Construction loans are not funded in a lump sum. Funds are released in stages as work is completed and verified. Expect draw requests, inspections and supporting paperwork each time. Our draw schedule article goes through the process step by step. Keeping your documentation current is the simplest way to keep money flowing.
6. Conversion to a permanent loan
The exit for many ground-up projects is a permanent loan. Our program can convert to a permanent loan at conventional rates on completion, so you do not have to arrange separate takeout financing from scratch. Conversion still depends on the finished project meeting the lender's requirements, so plan for it from the start. See how bridge-to-permanent conversion works.
Documentation levels
Minimal or no-doc options are available where the deal supports it, which generally means the strength of the project, the equity and the sponsor carry the file. Do not assume your deal qualifies; each application is reviewed individually.
Timing and costs
We can offer approval in as little as 24 hours and funding in as little as seven days, subject to a complete file, underwriting, title review and property valuation. For ground-up projects there is more to review, so a longer timeline is common. Approval is not guaranteed.
Construction financing typically costs more than a long-term bank loan. Judge it on total cost over the build period and on whether it gets the project built. Ask for every cost in writing.
This article is general information only, not legal, tax or investment advice.
To discuss a ground-up project, see our construction page, call (800) 943-1314 or apply online.
Published by the US Lending & Company underwriting desk. General information only — not legal, tax or investment advice.