Construction Loans

Construction loans are a form of financing designed to help a business create real estate from the foundation to the roof. In some cases, a construction loan can also cover land development or renovations on an existing property. Funds are paid out based on construction milestones, sometimes directly to the contractor involved in the project. These loans are short-term, meant only to cover expenses until the building is complete.

CONSTRUCTION LOANS

Overview

Construction loans provide short-term financing for new builds and major renovations, typically taken out by builders or companies. Lenders review detailed plans, blueprints, and contractor qualifications before approval, and funds are released in stages as milestones are completed. These loans usually require interest-only payments during construction, with long-term financing secured once the project is finished. Some even roll automatically into permanent financing.

Ground-Up Construction

Finance the full cost of building a new property from start to finish.

Major Renovations

Cover expenses for large-scale improvements or expansions to existing buildings.

Project Completion

Secure funds to finish stalled projects and move them toward permanent financing.

KEY FEATURES AT A GLANCE

Loan Highlights

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Direct Payment

Lenders may pay funds directly to contractors.

Milestone Funding

One milestone must be completed before funds are released for the next.

Exit Strategy

Detailed plans must be submitted that include an exit strategy.

Credit Check

Since the real estate being built can’t be used as collateral, borrowers must have a good credit history.

150+

Lenders in our network

$500M

In available funds

24H

Fastest close

BENEFITS THAT ADD VALUE

Pros

Project Funding

Loans can be used to finance new construction or renovations.

Interest Only

Only interest payments are due until the project is complete.

Asset Leverage

Other property in the borrower’s portfolio can be used to secure a loan.

Refinance Option

Some loans roll over into long-term financing.

FACTORS TO CONSIDER CAREFULLY

Cons

Higher Rates

Interest rates are higher than traditional mortgages.

Repayment Risk

If long-term financing fails to come through, the borrower still has to pay back the loan.

Tight Criteria

Construction loans are often hard to qualify for.

Heavy Documentation

Extensive documentation has to be submitted and approved.

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