Hard Money Loans For New Construction
New construction loans for experienced investors up to 90% LTC.
For experienced investors and contractors, ABL’s hard money loans for new construction offer quick access to leverage and underwriting flexibility not available from conventional financing.
While all deals are unique, ABL typically lends up to 85%-90% of total deal cost. Plus, for construction escrows over $100k, the borrower only pays interest on funds as they’re drawn.
Why Use Asset Based Lending For New Construction Loans
|Experience||Credit Score Minimum||Interest Rate||Points||Advance Rate On Purchase||Advance Rate On Construction||ARV||Property Types||Pre-Pay Penalty||Extensions||Blanket Loans||Loan Size||Loan Terms|
|High||660||5.75%-10.5%||0-2%||Up to 90% Land Value||100%||Up to 75%||Single Family, Multi Family, Mixed Use||No||Available||Yes||$100K to $5M||12 Months|
Flexible underwriting criteria allows new construction real estate investors to secure funding not available to them through other institutions.
New construction investments for experienced contractors and investors are funded at interest rates of 5.75%–10.5% and 0–2% points. Loan amounts range from $100K to $5M.
Recent New Construction Case Study
Loan Amount: $925,000
Sale Price: $1,409,000
Believe it or not, this property was first purchased as a community church and transformed into three beautiful townhomes.
Close In 10 Days Or Less. Rates Start As Low As 4.99%.
What Are Hard Money Construction Loans?
For seasoned investors who are looking to challenge themselves by building a home from the ground up, or completing a tear-down and gut renovation of an existing structure instead of your average fix and flip, a construction loan for investment property is often the most attractive option.
A new construction hard money loan for investors is a short-term loan used to finance the construction of real estate investment property. Like other hard money loans for construction or renovations, a portion funds are distributed at closing to finance lot acquisition, and the rest are held in escrow. The construction funds held in escrow are distributed in arrears, or after certain phases of the scope of work are completed. The scope of work is used to create a draw schedule, which designates at which stage of the project certain work will be completed, and at what cost. Once a particular phase, or draw, is complete an inspection is ordered to confirm the work has been done. As soon as the hard money lender gets the confirmation, the funds are distributed. This whole process usually takes about 3 days. This draw process helps both the hard money lender and the borrower by keeping the project on track and within budget.
What Are The Benefits Of A Private Lender Construction Loan?
With most hard money loans, the loan amount is based on the as-is house or lot value combined with repair or construction costs. An additional benefit of a hard money construction loan is that there is no minimum credit score. However, keep in mind that unlike hard money fix and flip loans, experience is essential for an investment construction loan! ABL is willing to fund up to 70% of the land value and 100% of the construction budget, capped at 75% of the ARV. With interest rates from 9% to 11%, points ranging 1% to 2% and a loan term up to 18 months, seasoned investors rely on construction loans like these for finance their business.
Any seasoned investor knows how crucial a quick close can be. Real estate investing is a growth industry, and good deals move quickly. As experienced hard money construction lenders, we close loans in as little as 48 hours, and have an average close time of 10 days, unlike a conventional loan which takes a minimum of 60 days to close.
How Do I Get New Construction Hard Money Loans?
How hard is it to get a construction loan? The process of securing a hard money construction loan is much different than that of a conventional mortgage. Unlike a conventional loan, which requires a significant amount of paperwork, a new construction loan requires relatively light documentation. Once you have completed the new construction loan application, the loan officer and underwriter will review the deal with you and order an appraisal if the deal fits! The underwriter will ask questions about your experience, as well as request copies of the construction plans and other relevant documentation. From that point, ABL will issue a written term sheet that outlines all the loan’s details so there are never any hidden fees. The loan then moves to processing where the few required documents are collected, and ultimately the loan is closed by an attorney.