New Construction Loans: Ground-Up, Financed Like a Business Plan
Spec builds and build-to-rent projects don't fit consumer construction lending — they're business plans with foundations. Investor construction financing funds the land and the vertical build in one facility, drawn as the project rises.
2 minutes · No documents · No tax returns
By OneMoreDoor Capital Team · Updated
There's a moment in every market cycle when the deal isn't on the MLS — it's a lot, a set of plans, and a build cost that pencils below what the finished product sells or rents for. Investor construction lending exists for that math. It's not the consumer construction-to-perm loan from a retail bank: it's business-purpose financing that underwrites the project — land, budget, exit — the way you underwrote it.
What is an investor construction loan?
A short-term, business-purpose facility that funds land acquisition (or recognizes land you own as equity) plus the vertical construction budget, released in stage-based draws as the build progresses. Sizing runs on loan-to-cost and the completed value; qualification runs on the project and the builder's execution capability — not your tax returns. The term matches a construction schedule, and the loan is designed from day one to be taken out by its exit: the spec sale, or the rental refinance.
How the build gets funded
Underwrite the project
Land, plans, itemized budget, timeline, and exit. The construction budget becomes the draw schedule.
Close — land and build in one facility
Acquisition (or owned-land equity) plus vertical costs, structured as one loan with a defined draw plan.
Build and draw by stage
Foundation, framing, mechanicals, finishes — each verified stage releases its funds. Interest typically accrues on drawn balances.
Exit at completion
Spec: list and sell. Build-to-rent: lease it and refinance into a DSCR loan on the new rent — the BTR pipeline in two steps.
What you need to qualify
- A real project file — site, plans, itemized budget, and timeline; the quality of this package sets the tone of the whole loan
- Execution capability — your build track record, or a proven GC contracted to run the job
- Equity in the project — cash at closing and/or land value; construction is not zero-down lending
- A declared exit — spec sale or build-to-rent refinance, underwritten from day one
- An entity — construction facilities close in your LLC as standard
Who this is for
Spec builders running one to several projects a year; build-to-rent investors creating the rental instead of bidding for it — with the DSCR refinance as the stabilization exit; infill developers doing teardown-rebuilds where the land is worth more than the structure; and flippers graduating to ground-up when the rehab math stops competing with the build math. If the project is renovation rather than new vertical construction, the right tool is a fix & flip loan.
Investor construction loans fund non-owner-occupied projects — homes built to sell or rent, never to move into. Building your own residence is consumer construction lending, which we don't offer.
Run your build's numbers
Land, budget, exit — see how the project finances stage by stage. Underwritten on the deal, not your tax returns.
2 minutes · No documents · No tax returns
Does land I already own count toward my equity?
Generally yes — owned land, especially free and clear, is real equity in the project and typically reduces the cash you bring to closing. Land value, basis, and how long you've held it all factor into the structure. Bring the land story to the first conversation; it often changes the whole capital stack.
Do I need builder experience to get a construction loan?
Experience drives terms more than eligibility. Programs exist across the spectrum — from investor-with-a-GC structures to lines for production builders — but leverage, pricing, and required oversight all scale with the track record of whoever is executing. A newer investor paired with a proven general contractor is a financeable file.
How do construction draw inspections work?
Each draw request corresponds to completed stages in your budget — foundation, framing, mechanicals, finishes. An inspector verifies the work is in place, and the draw funds against it. Clean budgets and organized documentation make draws fast; the schedule is set with the loan so there are no surprises mid-build.
Spec sale or build-to-rent — does my exit change the loan?
The exit shapes the structure from day one. A spec build underwrites toward the sale market and comps; a build-to-rent project underwrites with the rental exit in view, often pairing the construction facility with a planned DSCR refinance at stabilization. Declare the exit early — changing it mid-project is possible but costs cleanliness.
Can I finance a teardown-and-rebuild?
Yes — acquisition of the existing structure, demolition, and the new vertical build can be structured as a ground-up project. The line between a heavy rehab and a rebuild matters for program fit: once the plan involves a new foundation or full demolition, you're in construction territory, not fix-and-flip territory.
Ready to run your deal?
Tell us the property, the rent, and the plan — your DSCR computed on the spot, options priced on the property's cash flow.
2 minutes · No documents · No tax returns