Ground-up construction is the highest-margin play in residential real estate — and the most operationally complex. This guide covers how the loan structure works and what lenders look for.
Loan-to-cost (LTC) caps the loan against your total project cost (land + hard + soft costs). Loan-to-value (LTV) or ARV caps it against the appraised finished value. The lower of the two constrains your loan.
Construction loans fund in stages tied to project completion — typically foundation, framing, mechanicals, drywall, and final. Each draw requires an inspection.
Preferred but not required. First-time builders can qualify with a licensed GC, detailed budget, and 20%+ skin in the game.
Standard terms are 12–18 months with a 6-month extension option. Complex projects can get 24-month initial terms.
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https://gelitecapital.com/resources/guides/new-construction-financing-101