Ground-Up Construction Loans for Real Estate Investors
Finance up to 75% of land cost and 100% of vertical construction costs on residential investor builds. 12-24 month interest-only terms with draws tied to inspection milestones. Exit to DSCR rental or sale.
What is a ground-up construction loan for residential investors?
A ground-up construction loan finances the purchase of land plus 100% of vertical construction on residential investor 1-4 unit builds. 12-24 month interest-only terms, funded in tranches against inspection milestones. Up to 75% land cost + 100% vertical (capped at 85-90% LTC). Rate range 9-12% interest-only. Exit to sale or DSCR rental refinance once stabilized.
— PeerSense Capital Advisory · 2026-05-01
At a glance — who this is for
- ✓ Builders + developers funding 1-4 unit ground-up residential investor builds
- ✓ Spec builders planning to sell + build-to-rent operators planning DSCR refi
- ✓ Borrowers with 10-15% equity contribution + verified general contractor
- ✓ Project sizes $100K–$5M total cost basis
Program details
| Loan size | $100,000 – $5,000,000+ |
| Land cost financed | Up to 75% of land cost |
| Vertical construction financed | Up to 100% |
| Total LTC cap | 85-90% (borrower contributes 10-15% equity) |
| Term | 12-24 months interest-only |
| Rate | 9.00-12.00% IO (May 2026 indicative) |
| Min FICO | 660 mid-score |
| Property types | 1-4 unit residential, townhomes, PUD |
| Recourse | Full recourse + personal guarantee |
| Draw schedule | 4-6 draws against inspection milestones |
| Inspection cost | ~$300-600 per draw, borrower-paid |
| Builder experience | First-time builders accepted with verified GC |
| Exit | Sale OR DSCR rental refinance |
| Decision timeline | 5-7 business days |
| Close timeline | 21-35 days from complete file |
Who qualifies
- ✓ US citizens, LPRs, foreign nationals, LLC, individual, trust
- ✓ 660+ FICO mid-score (lower with stronger profile)
- ✓ Verified GC license + insurance + 3 prior project references
- ✓ Full plans, permits, and itemized construction budget
- ✓ 10-15% equity contribution (cash or land equity)
- ✓ Builder financial statement + 2 years tax returns or 12 months bank statements
How it works
- 1. Inquiry — submit project facts via the form below
- 2. Term sheet — within 24-48 hours, indicative pricing + structure
- 3. Underwriting — appraisal + plans review + GC verification
- 4. Close + first draw — fund land purchase + initial construction draw
- 5. Construction draws — 4-6 inspection-tied draws across 12-24 months
- 6. Exit — sale OR refinance to DSCR rental loan
Frequently asked questions
What is a ground-up construction loan?+
A ground-up construction loan finances the purchase of land plus the cost of vertical construction on a residential investor build (1-4 unit). Interest-only during construction (12-24 month term), funded in tranches against inspection milestones.
How are construction draws structured?+
Draws are tied to inspection milestones — typically 4-6 draws across the construction timeline. Standard schedule: Draw 1 (foundation/site work, ~15%), Draw 2 (framing complete, ~20%), Draw 3 (rough mechanicals + drywall, ~20%), Draw 4 (interior finishes, ~25%), Draw 5 (final completion, ~20%). Each draw requires a third-party inspection report verifying completed work.
What's the typical equity contribution?+
Builders typically contribute 10-15% of total project cost as equity (the gap between 85-90% LTC max and 100%). On a $500K total project (land + vertical), expect $50-75K equity injection. Some programs accept land equity in lieu of cash if the borrower already owns the land.
What's the construction loan rate?+
Ground-up construction loan rates run 9-12% interest-only as of May 2026, depending on builder experience, project complexity, market, and exit thesis. First-time builders typically price 50-150 bps wider than experienced developers. Interest accrues only on drawn balance, not full commitment.
Can a first-time builder qualify?+
Yes — most programs accept first-time builders with a verified general contractor, completed plans/permits, and adequate equity contribution. Some programs require GC to have 3+ verified prior builds; others accept a builder-of-record relationship.
What's the exit strategy?+
Two primary exits: (1) Sale — list and sell the completed property, payoff the construction loan from sale proceeds. (2) DSCR rental refinance — keep as rental, refinance into long-term DSCR loan once stabilized (60-day seasoning typical).
What documentation is required?+
Builder financial statement, 2 years tax returns or 12 months bank statements, GC license + insurance + 3 references, full architectural plans + engineering specs, signed building permit, recorded land deed, itemized construction budget, projected sale comps or rental projection.
What about spec build vs build-to-rent?+
Both qualify. Spec builds use sale comps as the underwriting basis. Build-to-rent qualifies based on projected DSCR. Some programs offer a slight pricing benefit for build-to-rent due to takeout-DSCR-loan certainty.
Get a Construction Loan Term Sheet
No retainer. No application fee. Indicative pricing within 24-48 hours of complete project facts.
Submit Your Construction Project →