Ground-up construction financing requires lenders to underwrite a project that does not yet exist in completed form. That makes experience, site readiness, plans, budget, liquidity and exit strategy central to the credit decision. Because Landlord Lending works with multiple investment-property lenders, exact credit, leverage, experience, liquidity, draw, property and documentation guidelines can vary by lender, program and overall deal strength.
Construction Lending Is Project Underwriting
Ground-up construction lenders evaluate more than the finished property. They are financing an execution plan that must move from land or site control through completion and exit.
Borrower and Builder Experience
Relevant completed projects, construction management capability and the general contractor’s track record can affect eligibility and terms.
Land and Site Readiness
Ownership or acquisition basis, zoning, utilities, access, entitlements and site conditions can affect whether and when a project can begin. Lenders may require certain conditions to be met before closing or funding.
Plans, Permits and Budget
Construction documents, approved plans, permit status and a detailed budget give the lender visibility into what will be built, how much it will cost and whether the project can realistically be completed.
Equity and Liquidity
Lenders commonly require the borrower to contribute equity to the project and maintain sufficient liquidity to manage carry, overruns and working capital needs during construction.
Exit Strategy
Whether the exit is a sale after completion or a refinance into long-term rental financing, the exit path affects how the construction loan is sized and structured.
How Landlord Lending Helps
Landlord Lending helps real estate investors evaluate ground-up construction financing based on the project, experience, budget, leverage and exit strategy, including the path to long-term rental financing.
Explore the Ground Up Construction Loan.
Related: Ground-Up Construction Loans: The Complete Guide · How Construction Loan Draws Work
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Request Loan TermsFrequently Asked Questions
Do construction loans require experience?
Many lenders place significant weight on borrower, developer or builder experience, but requirements vary.
Do I need permits before a construction loan closes?
Permit and readiness requirements vary by lender and project. Investors should confirm the required stage early.
Can land equity count toward the project?
It may, depending on ownership, basis, valuation and lender guidelines.