Ground-Up Construction Loans
From Raw Land to Certificate of Occupancy — Fund Every Phase of Your Build
Draw-based construction financing from $100K to $50M for new-build residential, commercial, and mixed-use projects. Funds release at each verified milestone, so your capital tracks your progress — not the other way around.
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Rates, terms, fees, and funding timelines vary by lender, applicant eligibility, and program requirements.
A ground-up construction loan finances the construction of a new building from raw or improved land through to a certificate of occupancy. Unlike a traditional mortgage that funds the purchase of an existing property, a construction loan releases capital in installments — called draws — as each phase of the build is completed and inspected. The lender funds the project's hard costs (materials and labor) and soft costs (permits, plans, engineering), with the borrower typically paying interest only on the amount drawn during the build.
Ground-up construction financing serves a broad range of projects: single-family spec homes, custom residential builds, multi-family and small-batch subdivisions, mixed-use developments, owner-occupied commercial build-outs, and light commercial or industrial construction. If your project involves breaking ground on a structure that does not yet exist, this is the funding category it lives in.
The U.S. Small Business Administration notes that construction and development projects carry distinct financing structures because the collateral — the building — does not exist yet, so lenders underwrite the completed value of the project and the borrower's track record rather than an existing asset. Because the loan is asset-based, personal income documentation matters less than the project's economics and the sponsor's experience.
Most ground-up construction loans are interest-only during the build, then convert to a permanent mortgage (a takeout loan) once the certificate of occupancy is issued. This construction-to-perm structure means you finance the build and the finished building under a single program, avoiding a second closing. For investors planning to sell, the loan is simply paid off from sale proceeds at completion.
A Simple, Fast Process
Submit Your Project
Provide your plans, budget, timeline, land details, and sponsor experience. We match you with construction lenders who fund your project type and geography.
Get Approved on ARV & Borrower
Lenders underwrite the after-completion value, the loan-to-cost ratio, and your track record — not your personal income. Approvals land in 2–8 weeks depending on project complexity.
Close & Draw at Milestones
Funds release in draws tied to verified construction milestones — foundation, framing, dry-in, MEP, finish. Each draw is inspected before release, keeping your capital aligned to progress.
Finish & Take Out (or Sell)
At certificate of occupancy, convert to a permanent mortgage, refinance into a DSCR or commercial loan, or pay off from sale proceeds — whichever fits your exit strategy.
How Businesses Use This Financing
Spec & Custom Homes
Build single-family spec homes or custom residences for sale or long-term hold, with draws tied to each construction phase.
Multi-Family Development
Finance new-build duplexes, fourplexes, or small multi-family projects with takeout into a DSCR loan at stabilization.
Commercial Build-Outs
Construct owner-occupied or investment commercial space — office, retail, industrial, or mixed-use — with a construction-to-perm conversion.
Land Development
Take raw or partially improved land through entitlements, site work, and vertical construction under a single draw-based facility.
Subdivision & Small-Batch
Build out a handful of lots as a phased development, releasing capital lot by lot as each home completes.
- Draw-based funding releases capital only as work is completed and inspected
- Interest-only payments during construction — no amortization until the building is finished
- Construction-to-perm conversion avoids a second closing and double fees
- Approval based on after-completion value and project economics, not personal income
- Lenders matched to your project type, geography, and sponsor experience
- Covers hard costs (materials/labor) and soft costs (permits, plans, engineering)
- Flexible loan-to-cost ratios up to 80–90% for experienced sponsors
- Takeout options include sale, refinance, DSCR, or permanent mortgage
- ◆Project plans, budget, and construction timeline
- ◆Land details — owned or under contract
- ◆Licensed general contractor and permits (in progress or issued)
- ◆Sponsor experience — prior projects help, but first-time builders can qualify with the right team
- ◆After-completed value supporting the loan-to-cost ratio
- ◆Personal credit 640+ for most programs (varies by lender)
- ◆Down payment or land equity typically 10–25% of total project cost
The Builder Who Financed Six Lots Without Draining One
How a draw-based construction line let a small developer scale from one spec home to six
A residential developer in suburban Atlanta had been building one spec home at a time, self-funding each project from the proceeds of the last. The pace was steady but slow — he could only start a new home once the previous one sold, which meant months of idle land and a crew that sat between jobs. He wanted to break ground on six lots he'd already entitled, but his bank required 30% down on each and wanted full personal income documentation, which a self-employed builder's tax returns rarely satisfy cleanly.
He came to Let's Syndicate and was matched with a construction lender who underwrote the after-completed value of each lot and the builder's three completed-project track record rather than his W-2 income. The lender structured a single construction line covering all six lots at 80% loan-to-cost, with draws released at foundation, framing, dry-in, and finish — each inspected before release. Interest was interest-only during the build, and the line converted to permanent DSCR financing on the lots he planned to hold as rentals.
The builder broke ground on all six lots within the same quarter. The draw structure meant he never carried the full loan balance at once — interest accrued only on what was actually in the ground — and his crew stayed busy with no idle gaps between projects. Four lots sold within eight months of completion, paying down the line; two converted to DSCR loans and became long-term rental income. He started the next phase with his equity intact and a lender relationship that would fund the next six lots without re-underwriting from scratch.
Result: 6-lot construction line at 80% loan-to-cost. Draw-based funding at 4 milestones. Interest-only during build. 4 lots sold, 2 converted to DSCR rentals. Builder scaled 6x without self-funding a single lot.
Construction Capital Should Move at the Pace of Your Build
Many builders lose momentum waiting on capital that releases in lumps — or worse, that requires a fresh application for every project. Ground-up construction is a milestone business: your capital should release when a milestone is met, not when a lender gets around to it. The right construction facility keeps your crew working, your land productive, and your equity compounding rather than sitting idle.
Let's Syndicate puts your single project in front of multiple construction lenders at once — local banks, private debt funds, and construction-to-perm specialists — so you compare loan-to-cost ratios, draw schedules, reserve requirements, and takeout terms side by side. You choose the facility whose draw cadence matches how you actually build, not the one whose underwriter happens to be fastest to answer the phone.
- Compare loan-to-cost ratios up to 80–90% across multiple construction lenders
- Draw schedules that match your milestone cadence, not a lender's calendar
- Construction-to-perm options that avoid a second closing and double fees
- Lenders matched to your project type, geography, and sponsor experience
- Interest-only during the build so your carrying cost tracks your draw, not your full loan
Common Questions About Ground-Up Construction Loans
A draw is a release of funds tied to a completed, inspected construction milestone — typically foundation, framing, dry-in (weatherproof shell), mechanical/electrical/plumbing (MEP), and finish. Before each draw is released, the lender (or a third-party inspector) verifies that the prior phase is complete. You pay interest only on the amount actually drawn, so your carrying cost grows as the project progresses rather than hitting you with the full balance on day one.
A fix-and-flip loan finances the renovation of an existing building. A ground-up construction loan finances building a new structure from raw or improved land — there is no existing building to renovate, so the loan covers the full vertical construction from foundation to certificate of occupancy. Ground-up loans typically have longer terms (12–36 months), larger amounts, and a more rigorous draw and inspection schedule, because the lender is funding a project that produces its own collateral as it goes.
Loan-to-cost is the percentage of the total project cost (land + hard construction + soft costs) the lender will finance. Ground-up construction lenders typically fund 70–90% of total project cost for experienced sponsors, with the borrower contributing the remainder as down payment or land equity. The exact ratio depends on the project type, the after-completed value, and the sponsor's track record.
Not necessarily. The land can be owned outright, purchased with the loan proceeds (the land cost becomes part of the total project cost the lender finances), or under contract. If you already own the land free and clear, your land equity often counts toward your required down payment, reducing the cash you need to bring to closing.
Yes, though the terms may be more conservative. Lenders weigh the sponsor's experience heavily, so a first-time builder typically sees a lower loan-to-cost ratio (closer to 70%), a larger required down payment, and may need a licensed general contractor on the project rather than acting as their own GC. Partnering with an experienced GC or co-sponsor can meaningfully improve your terms.
You have three common exits. First, a construction-to-permanent loan converts your construction balance into a long-term mortgage automatically once the certificate of occupancy is issued — no second closing. Second, you refinance into a separate loan such as a DSCR mortgage (for rentals) or a commercial mortgage (for owner-occupied). Third, if you are selling the completed project, you simply pay off the construction loan from sale proceeds at closing.
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Let's Syndicate is a business funding marketplace. All credit decisions, rates, terms and outcomes are determined by participating lenders, investors or third-party providers.