Construction Loans

Best uses

• Major renovations beyond a cosmetic flip
• Additions and expansions
• Teardown and rebuild projects
• New construction for sale or rent

Typical borrower profile

• Investors and builders with project experience
• Developers with plans, budgets, and permits in motion
• Owners expanding an existing income property

Potential qualification factors

Every lender sets its own criteria, and no factor guarantees or blocks approval on its own. Commonly reviewed items include:

• Project budget, plans, and timeline
• Builder or GC experience and references
• Land or property equity
• Borrower liquidity for contingencies
• Realistic completed value

Documentation to have ready

• Government-issued ID
• Entity documents (LLC or corporation)
• Purchase contract or payoff statement
• Property details and photos
• Insurance quote or declarations page
• Plans and specifications
• Detailed construction budget
• Builder resume or license and references
• Permits or permitting status

Benefits

• Interest typically accrues only on drawn funds
• Draw structure keeps the project accountable
• Programs exist for both experienced and newer builders
• Exit paths into permanent loans are well-worn

Common challenges to plan for

• Cost overruns are the classic project killer; hold contingency
• Draws and inspections add administrative rhythm
• Weather, permits, and labor can stretch timelines

Frequently asked questions