Ground-Up Construction Loans Explained for Builders

Ground-up construction loans finance new builds from land acquisition through completion. Unlike purchase loans, construction financing releases funds in draws as work progresses.

Two main structures exist: one-close (construction converts to permanent financing at completion) and two-close (separate construction and permanent loans). One-close simplifies the process; two-close offers more flexibility.

Lenders require detailed plans, specifications, a construction budget, and a licensed general contractor or proven builder track record. Loan-to-cost typically reaches 80–90% for experienced builders.

Draw schedules follow construction milestones — foundation, framing, mechanicals, and finish. An inspector verifies completed work before each draw is released.

If you're planning a spec build, custom home, or small commercial project, submit your construction budget and timeline for a funding review.