Construction Loans
Ground-up construction for investors and builders: spec homes, build-to-rent, 1-4 units and small multifamily, $1M to $5M. Draws tied to your build milestones.
Construction financing is complex. Between draw schedules, inspections, cost overruns, and timeline changes, you need a lender who understands development, not just lending.
We connect you with construction lenders who have funded hundreds of projects and know how to structure draws, handle change orders, and keep your project moving. From spec homes to 200-unit multifamily developments.
Our lender network includes specialists in ground-up, heavy renovation, and horizontal development. We'll find the right fit for your project scope, timeline, and experience level.
$1M – $5M
Construction Loans: terms at a glance
Updated · David Hodara, Founder
| Loan size | $1M to $5M |
|---|---|
| Leverage | Up to 85% LTC |
| Term | 12-24 months, interest-only on drawn balance |
| Rate | Typically 9-12%, interest-only on the drawn balance (as of October 2026; rates move with the market) |
| Fee | 1-2% of the loan, paid at closing. No upfront fees |
| Term sheet | 24-48 hours |
| Closing | About two weeks on a clean file |
| Property | Single-family, 2-4 units, condo, townhome, small multifamily up to 9 units, held for investment |
| Borrowers | US investors and foreign nationals on the same terms, through an LLC. No US credit history required for non-US investors |
| Purpose | Business-purpose only, non-owner-occupied |
Ground-up spec homes and small residential development, with a draw schedule tied to milestones.
Key Features
Flexible Draw Schedules
Draws aligned with your construction milestones. Funded upon inspection approval.
Ground-Up & Rehab
Spec builds, build-to-rent and heavy renovation on residential investment property.
Interest-Only During Build
Pay interest only on drawn funds. No principal payments until construction is complete.
12-24 Month Terms
Terms designed to match your construction timeline with extension options if needed.
Experience Matters
First-time developers welcome with the right project. Experienced builders get the best terms.
Exit Strategy Support
We help plan your takeout financing before construction even begins.
Ideal For
Ground-up residential and commercial development
Heavy rehab and gut renovation projects
Spec homes and small subdivisions
Build-for-rent developments
Mixed-use construction
Developers with a clear construction budget and timeline
Construction Loans in active state markets
Market-specific dynamics affect how construction loans get structured and priced. Browse the state × asset class pages for local context, top metros, and FAQs.
FL · Ground-Up Construction
Florida Ground-Up Construction →
FL · Small Multifamily (5-9 Units)
Florida Small Multifamily (5-9 Units) →
TX · Fix and Flip
Texas Fix and Flip →
TX · Ground-Up Construction
Texas Ground-Up Construction →
TX · Build-for-Rent
Texas Build-for-Rent →
TX · Small Multifamily (5-9 Units)
Texas Small Multifamily (5-9 Units) →
CA · Ground-Up Construction
California Ground-Up Construction →
CA · Small Multifamily (5-9 Units)
California Small Multifamily (5-9 Units) →
NY · Small Multifamily (5-9 Units)
New York Small Multifamily (5-9 Units) →
AZ · Ground-Up Construction
Arizona Ground-Up Construction →
AZ · Build-for-Rent
Arizona Build-for-Rent →
GA · Ground-Up Construction
Georgia Ground-Up Construction →
GA · Build-for-Rent
Georgia Build-for-Rent →
TN · Ground-Up Construction
Tennessee Ground-Up Construction →
TN · Build-for-Rent
Tennessee Build-for-Rent →
NC · Ground-Up Construction
North Carolina Ground-Up Construction →
NC · Build-for-Rent
North Carolina Build-for-Rent →
Plan your construction loans
Run the numbers
Estimate your payments →Related guides
- How a construction loan works for a Texas spec home→
- Construction and development loans in Houston→
- Investment property construction in Orlando→
- Equity needed for a $1.5M construction loan→
- 85% loan to cost on a Los Angeles spec build→
- Spec home construction loans in Charlotte and Raleigh→
- Build-to-rent construction financing in Arizona→
- Build-to-rent construction loans in Nashville→
- What a business-purpose mortgage to an LLC is→
- Bridge loan vs. construction loan→
- What a lender needs to approve a spec home construction loan→
- Financing a build-to-rent project under $5M→
- Land, build, then refinance into DSCR→
- Construction loans in Texas for foreign nationals→
- Construction loans in Florida for foreign nationals→
- Construction loans for a duplex, triplex or fourplex→
- Build-to-rent in Texas, North Carolina and Georgia→
Related financing
Frequently Asked Questions
Is a construction loan a business-purpose mortgage to an LLC?
Yes. A ground-up construction loan here is a business-purpose mortgage to your LLC, secured by the land and the investment property being built, with funds drawn as each stage is completed. It is not a consumer mortgage: it finances spec homes and build-to-rent for sale or rental, never a house you or your family will live in.
How do construction loan draws work?
Construction loans are funded in draws (also called disbursements) tied to construction milestones. After each phase is completed, the lender sends an inspector to verify the work, then releases funds for the next phase. Typical draw schedules include 4-6 milestones: foundation, framing, mechanical/electrical, drywall, finishes, and completion. You only pay interest on the amount drawn.
What is the typical LTC for a construction loan?
Construction lenders typically finance 75-85% of total project cost (LTC), which includes land acquisition, hard costs, soft costs, and contingency reserves. This means you need 15-25% equity in the deal. Experienced developers with a strong track record may qualify for higher leverage.
Can first-time developers get a construction loan?
Yes, but terms will reflect the additional risk. First-time developers typically need a stronger project (lower LTC, better location, proven demand), a larger equity contribution (25-30%+), and ideally a general contractor or development partner with experience. We match first-time developers with lenders who specialize in newer borrowers.
What happens if construction costs exceed the budget?
Cost overruns are common in construction. Most lenders require a 5-10% contingency reserve built into the original budget. If costs exceed both the budget and contingency, the borrower is typically responsible for funding the difference out of pocket. Some lenders offer change order processes that can adjust the loan amount for justified increases.
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Submit a DealDisclosure: Passy Capital LLC, a Florida limited liability company (registered at 7901 4th St N, Ste 300, St. Petersburg, FL 33702), is a commercial real estate financing brokerage, not a direct lender. All loans are placed through third-party lenders and are subject to lender approval, underwriting, credit, property, and other criteria. Rates, terms, and conditions vary by lender, borrower profile, and deal specifics. Information presented does not constitute a commitment to lend. Loans are for business purposes only and made to limited liability companies or other entity borrowers; they are not offered to consumers and are not for personal, family, or household use. Programs are available in select states; licensing requirements vary by jurisdiction.