Ground-up construction loans for investors: what your build needs to get funded.

A short-term, interest-only loan that takes a new house or 2–4 unit building from bare lot to finished property. The lender advances part of the land at closing and pays the build budget out in draws as each stage passes inspection. Investors repay it by selling or by refinancing into a long-term rental loan, usually within 12–24 months.

Start at 10–17.5% of total project cost, the gap that 82.5–90% loan-to-cost leaves. Add any soft costs the lender won’t fund, plus points, closing costs and insurance. On our duplex that came to $86,196 on a $472,000 project. You need more if the completed-value cap binds, and a lot you already own can cover much of it.

Loan-to-cost measures the loan against what the project costs you: land, the build and sometimes soft costs. Loan-to-completed-value measures it against what the appraiser says the finished property will be worth. Lenders apply both and lend the lower answer. Thin margins make the value cap bind; at 90% of cost and 70% of value, that starts once cost passes about 78% of value.

Usually some. LendingOne wants one completed ground-up project in the past 36 months, and Roc and Civic one or two. Lima One counts GC or fix-and-flip experience. RCN lends to builders with no recent projects, but caps that tier at 85% of cost and 65% of completed value, against 90% and 75% for builders with five or more.

Not at every lender. Kiavi says you can close without them. Roc and Civic close on an unpermitted lot but advance only 60% of it, topping that up to 75% with a catch-up draw after approval. Have the plans, budget and zoning nailed down either way: the lender reviews them before it sizes the loan.

The build budget is held back at closing. Finish a stage, ask for the draw, and the lender checks the work, in person or from photos, before it wires the money: in as little as 24 hours at Lima One and 2 days at LendingOne. You pay interest only on what has been drawn, and someone, you or your builder, carries each stage until its draw lands.

It is loan money set aside to cover monthly interest during the build. Roc and Civic require at least one month; LendingOne requires none at closing. A financed reserve adds to your balance but can raise your leverage: Roc’s experienced tier lends 90% of cost with one and 85% without. On our duplex a $27,000 reserve covered 12 months of interest.

You pay for the overrun. The holdback is fixed when the loan closes, so a 10% overrun on a $380,000 build is $38,000 of your own cash on top of your equity. Keep a contingency in your account rather than inside the budget you hope to stretch, and clear any scope change with the lender before the crew starts it.

The value cap can take over from the cost limit. On our duplex the $424,800 loan holds as long as the as-completed appraisal is at least about $606,900. At $590,000, 70% is $413,000, so you bring $11,800 more. A low value at the refinance hurts too: at $580,000, a 75% rental loan falls about $300 short of the payoff and costs.

Usually 12–24 months, interest-only. Kiavi writes 12-, 18- and 24-month terms, with extension options of 3 or 6 months. Roc and Civic begin at 12 months and can stretch to 18 or 24 at their discretion. Take a term with room past your schedule. Our duplex needs 12 months to build and exit, and once its reserve is spent each extra month costs about $3,700.

Few construction lenders publish one. RCN’s 650 minimum was the only published floor among the national programs we checked in October 2026. Lima One’s preapproval uses only a soft pull; the hard pull waits until a specific loan goes in. Your record as a builder and the cash you can show usually move the terms more than a few points of score.

Yes. That refinance is how a build-to-rent deal ends. When the property is finished and leased, a DSCR loan sized on the completed appraisal and the rent pays off the construction loan. On our duplex a 75% cash-out of $468,750 repays the roughly $424,440 balance and returns $32,592 after costs, with $5,200 of rent covering the $3,898 payment 1.33 times.

Enough to clear the lender’s ratio on the new payment. On our duplex a 75% loan costs $3,898 a month with taxes and insurance, so a 1.00 lender needs that much rent. At $3,600 the loan shrinks to about $425,700, roughly the payoff, and you bring about $9,400 to cover costs. Breaking even after a 25% set-aside takes about $5,200.

No. These loans are for property you will sell or rent to others, and neither you nor any relative can live there. To build a home you’ll occupy, talk to a residential lender about a construction or construction-to-permanent mortgage, which follows consumer lending rules.