Ground Up Construction Loans

How the Ground Up Construction Program Works

• Short-Term Duration: Construction loans are structured with 12 to 24-month terms, providing an adequate runway to build the property and transition into a permanent loan or sell the asset.


• Milestone-Based Draws: Loan proceeds are not released all at once. Instead, funds are disbursed in phases—known as draws—as specific construction milestones are completed and verified by an inspector.


• Interest-Only Payments: To protect your cash flow while the property generates no income, payments during the construction period are strictly interest-only.


• Interest Reserves: An interest reserve account is often built into the upfront loan budget, covering your monthly interest payments during the build.


• LTC Underwriting: Your maximum loan size is governed by Loan-to-Cost (LTC), with our program offering high leverage up to 85% LTC.


• Broad Loan Amounts: We accommodate a wide array of project sizes, offering funding ranging from $150,000 up to $5M+.

Requirements for Ground Up Construction Eligibility

• Business Entity Setup: Borrowers are required to apply and hold the project under a single-purpose commercial entity, such as an LLC, rather than in their personal name.


• Proven Builder Experience: Approval relies heavily on the sponsor's track record. Lenders want to see a history of successfully developing and completing similar ground-up projects on time and within budget.


• Strong Liquidity: Borrowers must demonstrate sufficient liquid cash reserves to cover down payments, potential cost overruns, and unexpected delays.


• Qualified General Contractor: Unless the developer has immense in-house construction experience, borrowers generally must hire an experienced, licensed general contractor utilizing a fixed-price contract to mitigate the risk of cost overruns.


• Property Type Limits: Eligible projects include SFRs, Townhomes, 2–4 Units, Multi Unit Residential, and SFR/Townhome Communities.

Steps to Qualify for a Construction Loan

• Step 1: Project Submission & Planning: Submit your project narrative, location details, and initial cost estimates to determine if the deal aligns with lending parameters.


• Step 2: Submit Detailed Documentation: Provide your architectural plans, specifications, building permits, and a comprehensive line-item budget for the build.


• Step 3: Contractor Vetting: Supply your general contractor's license, insurance, past project history, and a fixed-price construction contract for lender review.


• Step 4: Appraisal & Feasibility: An independent appraiser will determine the current land value and the future "as-completed" value, while a third party verifies the feasibility of your construction budget.


• Step 5: Underwriting Approval: The underwriting team performs a final review of your financial liquidity, track record, and the deal's LTC/LTV metrics to issue a formal, binding loan commitment.


• Step 6: Closing & Initial Advance: Our streamlined process allows you to close in 21 days or less. The initial advance is funded—typically covering land acquisition costs and pre-funding the interest reserve account.


• Step 7: Draw Management: As construction progresses, you will submit draw requests (e.g., for foundation, framing, or drywall completion), which are promptly funded after a third-party site inspection verifies the work.

Benefits of a Ground Up Construction Loan

Securing a Ground Up Construction loan empowers developers to scale their operations without tying up all their personal capital in a single project. By utilizing high-leverage parameters—up to 85% Loan-to-Cost—and managing cash flow through interest-only terms and interest reserves, builders can keep their funds liquid to weather unexpected delays or pursue new opportunities. With funding from $150K to $5M+ and the ability to close in 21 days or less, partnering with Bond Street Loans ensures you have a dedicated financial partner with a streamlined process, allowing you to focus on executing your vision and maximizing the return on your investments.