New Construction Loans

Construction Loans for New Builds

Construction financing for rental properties

  • Get approved quickly to start construction
  • Very competitive interest rates
  • Build spec home or multi-units
Get Preapproved
home under repair

New Build to Rent/Sell Overview

Investor eligibility

Loan amount & terms

Acceptable Properties

 

Example of a Build to Rent Scenario


• Build a spec home: $425,000
• Construction costs: $75,000
• Work crew costs: ?
• ACV (After Build Value): $550,000

Step 1: Get Hard Money/Bridge Loan:
• $400,000 pays off 1st loan of $300K + repair funds
• $75,000 to renovate (100% of construction costs)
Total Loan Amount: $400,000

Step 2: DSCR 30 Year Fixed Loan:
• New Value (ACV): $550,000
• Rent to tenant (premium for new): $3,000

‐ You now have paid off the hard money loan from your cash back
‐ You now have a property generating higher rent
‐ Your property value is projected to rise
fix and flip

Other options than new construction loans

• Consider a refinance mortgage from other real estate you own.

• A low doc and quicker method is a bridge loan for inevstors who have adequate equity.

• Apply for a 10-day home equity loan or line of credit from a rental property.

build to rent

New Home Build Lending Questions

Is there a prepayment penalty? + Sometimes lenders want to insure they receive the interest rate they're charging, so they may insert a prepayment penalty for six months to a year.
How soon can I get the funds? + Hard money funds can be received by the investor in 3 to 7 days once documents are back from title.
Can I get a hard money loan on my primary home? + Because of various federal laws and legislation, hard money loans are not offered on a primary residence.
What type of fees and interest rates should I expect?+ Fees will typically include origination points, underwriting, processing, appraisal, and possibly an environmental report fee. Interest rates range from 7-15%.