Ground Up New Construction Loans

Ground Up New Construction Loans

Ground Up New Construction Loans are specialized financing options designed exclusively for constructing new buildings from the ground up. Unlike standard mortgages or renovation loans, these loans cater to developers and investors looking to finance real estate projects that begin with bare or undeveloped land and involve the entire construction of a new structure.

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How Do Ground-Up New Construction Loans Work?

These loans are issued by banks, credit unions, and private lenders. The process starts with the borrower presenting a detailed project plan, budget, and timeline. The lender assesses the project's feasibility and potential return on investment before approving the loan.

Funding is not provided in a lump sum but disbursed in stages or "draws" as construction milestones are reached. This method ensures that funds are used appropriately and helps minimize the lender's risk. Interest is generally charged only on the portion of the loan disbursed, and full repayment is usually expected upon completion of the project or through refinancing with a more traditional mortgage solution.

Benefits of Ground-Up New Construction Loans

  1. Customization: Borrowers can design and build a structure that perfectly suits their specific needs, whether it's a residential home, a commercial building, or a multifamily unit.
  1. Potential for Higher Returns: With complete control over the construction, developers can maximize the efficiency and value of the property, potentially yielding higher returns than purchasing pre-existing structures.
  1. Interest Savings: Since interest is only paid on funds as they are disbursed, overall interest costs can be significantly lower than those of traditional loans, where interest accrues on the total loan amount from day one.
  1. Flexibility in Terms: Lenders often offer flexible terms on these loans, understanding that construction projects can face unexpected delays and challenges.
  1. Enables Large Projects: These loans are crucial for large-scale development projects that might not be feasible through other financing methods.

Choosing a Ground Up New Construction Loan is about seeing potential where others see empty space. It's about envisioning a new structure that meets current market needs and anticipates future trends. With the right planning and execution, these loans can turn a vision into a lucrative reality, making them a powerful tool in the arsenal of any serious developer or investor.

Ground Up

Loan on new construction
of a single property
SFR (1-4 unit), condo, townhome
Up to 85% of cost
12 to 24 month term (via extensions)
$250k – $5M+

Build for Rent

Loan on new construction of multiple rental properties with term loan take out
SFR or townhome only
Up to 75% of cost on construction (65% LTV stabilized)
24 month term on construction (3, 5, 7, or 10 year term on takeout)
$3M – $30M+

American Financial Lending Inc.

We bring a customized, unique approach to mortgages. Our lending solutions use the perfect hybrid of human-driven insights and technical prowess to process loans faster and significantly reduce costs.

PHONE

805-419-9097

E-MAIL

info@afloans.mortgage

ADDRESS

2625 Townsgate Rd. Suite 330, Westlake Village, CA 91361

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