Hard money loan for construction
Hard Money Loans For New Construction
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Hard Money Loans For New Construction

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 None 10%-12% 2-3 60% Land Value 100% 60% Single Family, Multi Family, Mixed Use No Available Yes $250K to $5M 12 Mo.

 

Closing Speed Closing Speed
A delay in securing funding could mean missing out on an incredible investment opportunity. We’ve closed loans in 48 hours, and average just 10 days.

 
Underwriting Flexibility Underwriting Flexibility
Flexible underwriting criteria allows investors in new construction to secure funding not available to them through other institutions. ABL has no minimum credit score requirements.

 
Competitive Rates Competitive Rates
New construction investments for experienced contractors and borrowers are funded at interest rates of 10%-12% and 2-3 points. Loan amounts range from $250,000 to $5,000,000.

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. View Full Case Study →

Be Our Next Case Study

Close In 10 Days Or Less. Rates Start As Low As 10%.

What Is A Hard Money Construction Loan?

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 hard money loan for new construction is often the most attractive option.

A new construction hard money loan 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 New 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 a new construction loan! ABL is willing to fund up to 60% of the land value and 100% of the construction budget, capped at 60% of the ARV. With interest rates from 10% to 12%, points ranging 2% to 3% 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. At ABL, we have closed 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 A New Construction Hard Money 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.

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