Ground-up construction loan requirements come down to four things: experience, credit, liquidity, and a project that pencils. This page covers all of them, plus the documents, the permits and the appraisal.
These are the requirements for our ground-up construction loan program. Read them, and you will know where you stand before you call. If you are close but not clean, call anyway. We will tell you which line is the problem.
| Experience | 3 completed projects with one like-kind exit in the last 36 months, or a general contractor with 3+ completed ground-up builds in the last 3 years |
|---|---|
| Credit score | 680 minimum |
| Borrowing entity | U.S. LLC, corporation, LP or sole proprietor |
| Guaranty | Full recourse from owners with 20% or more |
| Liquidity | Cash to close, 6 months of payments, 10% of the financed budget, plus any budget not financed |
| Equity | Minimum 10% of total project cost |
| Property types | 1–4 unit residential |
| Permits | Required before closing only for 70% loan-to-land |
| Appraisal | Required |
| Tax returns | Not required |
The standard is three completed projects, including at least one verified exit on a comparable build within the last 36 months. You need to have been on title and on the guaranty for the projects you are counting.
Heavy rehabs are reviewed case by case toward ground-up experience. So is a track record made up entirely of flips. Neither is an automatic yes or an automatic no, and the closer the work is to building a house from the foundation up, the more it counts.
What does not count as track record: vacant lots you have owned, projects still in progress, the property you are financing now, your personal residence, and rentals we cannot verify.
Track record does more than qualify you. It gives access to more leverage: up to 90% LTC, case by case for highly experienced borrowers.
Yes, through your general contractor. If your GC has completed more than three ground-up builds in the last three years, you can qualify with no completed projects of your own. Most construction lenders decline a first-time developer outright. We look at who is actually building the house.
What the GC has to provide:
The GC covers the experience. Everything else is still yours: credit, liquidity and equity all have to stand on their own.
680 minimum, on the credit report of anyone with 20% or more ownership and anyone signing the guaranty.
Beyond the score, we look at:
A thin file is not the same as a bad file. If there is something on your credit report with an explanation behind it, tell us up front rather than letting it surface in underwriting.
The question behind this requirement is simple: can you finish the house? A build that runs out of money halfway through is the worst outcome for everyone, so we verify up front that you can carry it to completion.
You need to show:
The funds can sit in a personal account or in a business account, as long as the business is yours and you have access to it. We need two months of statements for every account used to qualify, and any unusually large deposit has to be sourced.
Investment and brokerage accounts count at 60% of their value. Cryptocurrency and gift funds do not count.
Your equity requirement is separate from your reserves. How construction loan LTC is calculated covers your required contribution and what counts toward it, including using land equity for a construction loan.
The loan closes in the name of a U.S. entity: an LLC, corporation, LP, sole proprietorship or revocable trust. We cannot lend to an individual, an irrevocable trust or a community land trust.
A personal guaranty comes with it, from anyone owning 20% or more, and from anyone whose credit, liquidity or experience is being used to qualify. For very experienced borrowers there are cases where limited recourse works instead of a full recourse guaranty.
You will need your operating agreement, articles of organization, certificate of good standing and EIN. If the borrowing entity is owned by other entities, we need the documents for those too.
We lend to foreign nationals. You need a current, non-expired passport and a valid visa. Beyond that, nothing about the process changes: same experience standard, same liquidity, same documents, same timeline.
Foreign national loans price at our higher tier.
Whether you need permits in hand before closing depends on how much of the land you want financed on day one.
Either way, we need your plans and specifications before closing. If permits are still in review, tell us where they are in the process and we will size the loan accordingly.
Every ground-up loan is appraised. The appraisal establishes the land value and the value of the finished house, using at least three comparable sales, normally within a mile and a half of your lot. Loans above $3 million require a second valuation.
The most common problem on a ground-up appraisal is comps. If you are building something noticeably larger or more expensive than what has recently sold around it, the finished value may not appraise where you expect, and the loan sizes off the appraised number rather than your projection.
Every ground-up loan gets a budget review before closing. What we are testing is feasibility: can this house actually be built for this number, in this market, at these prices?
Line items come back under-budgeted often enough that it is worth saying plainly. Sometimes they come back over-budgeted. Either way we would rather find it before closing than at the fourth draw. Your budget also needs to include a 5% contingency.
What happens to that budget after closing is covered on the construction loan budget and draw process page.
Document collection is what usually determines whether you close in ten business days or twelve. Here is the full list, so you can have it ready before you apply.
No tax returns. No W2s. No debt-to-income calculation. This is business-purpose financing, underwritten on the project, your track record and your liquidity.
Every loan needs a stated exit, and the exit has to work on paper before we close.
Tell us the exit up front. It changes how we size the loan.
The biggest reason a ground-up loan gets declined is that the project is not set up to succeed. That usually shows up in one of three ways.
The borrower does not have enough experience. No completed projects, and no general contractor with a record we can verify.
The finished value is too low to support the cost. If what the house will sell for does not cover what it costs to build, the deal does not work no matter how strong the borrower is.
The borrower does not have enough liquidity. Not enough cash to carry the project through to completion.
If one of these is the problem on your deal, you will hear which one. A fast no is worth more to you than a slow maybe.
680 is the minimum. More track record gives access to more leverage: up to 90% LTC, case by case for highly experienced borrowers.
Yes. If your general contractor has completed more than three ground-up builds in the last three years, you can qualify with no completed projects of your own. Your credit, liquidity and equity still have to stand on their own.
Three completed projects, including one verified exit on a comparable build in the last 36 months. You must have been on title and on the guaranty for the projects you are counting.
Heavy rehabs are reviewed case by case for ground-up experience. A borrower whose track record is entirely flips is looked at individually rather than declined automatically.
No. This is business-purpose financing underwritten on the project, your track record and your liquidity. We do not ask for tax returns or calculate debt-to-income.
Yes. You need a current passport and a valid visa. Everything else about the process is the same, though foreign national loans price at a higher tier.
No. The loan closes in the name of a U.S. entity such as an LLC, with a personal guaranty from the owners.
Only if you want 70% loan-to-land at closing. At 60% loan-to-land, you can close before permits are issued.
Enough to close and to finish the project: cash to close, six months of payments, 10% of the financed budget, and any portion of the budget the loan is not financing. The funds can sit in a personal account or in a business account you own.
In most cases, yes, from anyone owning 20% or more. Very experienced borrowers can sometimes sign limited recourse instead of full recourse.
Send us the deal. We will tell you today, and we will tell you why.