A ground-up construction loan finances the process of creating a property from vacant land through a completed building. As the CFPB (Consumer Financial Protection Bureau) explains, construction loans are short-term financing where funds are advanced in stages as work progresses — unlike a traditional mortgage, which finances an existing property at a fixed value on a single disbursement.
That difference shapes everything about how lenders evaluate these deals. The lender is not only asking whether the borrower is creditworthy. It is also asking whether the project is realistically capable of reaching completion. LendSure Home Loans underwrites ground-up construction loans across three simultaneous dimensions: the borrower, the project, and the execution plan. For investment transactions, you can share your project details with our team before submitting a full application.
The Three Approvals Behind LendSure’s Ground-Up Construction Loan
Most borrowers focus on their own qualifications. We evaluate three things at once, and a strong borrower does not automatically fix a weak project.
| Approval | What the Lender Evaluates |
| Borrower | Credit, liquidity, reserves, experience (prior completed projects) |
| Property/Project | Land, zoning, plans, permits, as-is value, completed/ARV, location, marketability |
| Construction Plan | Builder, scope of work, budget, timeline, draw schedule, contingency, insurance |
The OCC’s (Office of the Comptroller of the Currency) Commercial Real Estate Lending handbook (March 2022) outlines construction-loan underwriting controls that include borrower equity, detailed project-cost budgets, contractor experience, construction timelines, inspection requirements, and disbursement controls. That framework reflects how serious lenders structure ground-up underwriting and explains why a checklist approach to this loan type misses the point.
Experience: What Counts and What Doesn’t
Not all real estate experience is the same. Someone who owns 15 rental properties has demonstrated financial management. Someone who has completed three ground-up builds has demonstrated something different: the ability to take a project from land through permits, foundation, framing, mechanicals, finishes, inspections, and completion.
The experience must be verifiable through public records under the borrower’s own name or their LLC, not as a capital contributor on someone else’s project.
LendSure’s Experience Tiers
| Experience | Maximum Leverage |
| 6+ completed ground-up builds (last 3 yrs)3+ completed ground-up builds (last 3 years) | Up to 90% of Cost to buildUp to 85% of cost to build |
| 0–2 verifiable ground-up builds | Up to approximately 80% |
| First-time ground-up builder | Considered; additional requirements apply |
Experience must be of comparable scope to the current project and verifiable through public records. First-time builders are welcome, but they should expect more conservative leverage and potentially additional documentation requirements.
Property Requirements: Not Every Lot Qualifies
Owning land does not automatically mean the project is financeable. The OCC’s construction-lending framework confirms that lenders evaluate whether construction documents conform to applicable building codes, zoning ordinances, subdivision regulations, health regulations, environmental requirements, and flood requirements.
LendSure’s property requirements are specific:
- Location: Urban or semi-urban infill, near established residential development. A vacant lot between two developed homes is a typical eligible scenario. Rural, remote, and low-population locations are not eligible.
- Population base: The market should have a population of at least 50,000.
- Utilities: Water, electricity, and heating must be at the curb.
- Permits and plans: Must be ready or within approximately 25 days of final approval at closing. LendSure will not fund a loan if permits are several months away.
- Property type: 1 to 4 unit residential properties. No manufactured or modular homes. ADUs are eligible when the main structure is a non-owner-occupied rental.
- Size: Maximum 5,000 square feet, with exceptions regularly made.
Can Land You Already Own Count Toward Your Equity?
Yes. If you own the lot free and clear, LendSure Home Loans can return up to 65% of what you paid at closing as a lot reimbursement. If you owned the lot for more than one year, the appraised as-is value is used instead of the original purchase price. Soft costs such as permits and architectural plans can also be included in the cost basis. This feature can significantly reduce the out-of-pocket cash required at project launch.
The Construction Budget: More Than Lumber and Labor
The OCC’s Commercial Real Estate Lending handbook specifies that construction budgets should include land, construction costs, off-site improvements, legal costs, loan interest, supervisory fees, and insurance — with a line-item budget for each stage. A realistic construction budget for a ground-up build looks more like this:
| Budget Category | Example Amount |
| Land/lot cost | $100,000 |
| Site work and grading | $25,000 |
| Foundation | $45,000 |
| Framing | $85,000 |
| Roofing | $20,000 |
| Electrical | $25,000 |
| Plumbing | $30,000 |
| HVAC | $20,000 |
| Interior finishes | $75,000 |
| Permits and soft costs | $15,000 |
| Interest/carry | $20,000 |
| Contingency (10–15%) | $25,000 |
| Total project cost | $485,000 |
The contingency line is not optional padding. Material prices shift. Site conditions vary. Plans change. A budget with no contingency is not a realistic budget.
LTC vs. LTA: How the Loan Gets Sized
Two metrics apply simultaneously, and the lower of the two controls the loan amount.
Loan-to-Cost (LTC) compares the loan to the total project cost: lot, construction budget, and soft costs. LendSure finances up to 65% of lot cost and up to 100% of construction costs.
Loan-to-After-Build Value (LTV) compares the loan to the completed appraised value of the finished property. LendSure Home Loans caps construction loans at 70% of ARV.
Both apply at once. If the ARV is well-supported and the budget is accurate, the two metrics typically align. If ARV is inflated or costs are understated, the LTA cap will reduce the loan below what the LTC math would otherwise permit.
Documentation: What We Actually Need
The FDIC’s guidance on residential construction lending emphasizes borrower equity and project feasibility documentation as core underwriting inputs. Here is what LendSure Home Loans typically evaluates for a ground-up construction loan:
| Category | Documents Commonly Requested |
| Borrower | Entity docs (LLC/S-Corp), credit authorization, liquidity verification |
| Experience | Prior project addresses, completion dates, costs, and completed values |
| Property | Purchase contract or deed, title, land documentation |
| Construction | Plans, specifications, scope of work |
| Budget | Detailed line-item construction budget |
| Builder | GC information, license and insurance, contract |
| Value | Appraisal including as-completed valuation |
| Government | Permits and zoning approvals |
| Insurance | Builder’s risk and other required coverage |
| Exit | Sale plan (spec build) or rental/DSCR refinance plan (BTR) |
LendSure Home Loans also requires a third-party feasibility study before closing. LendSure Home Loans sends out an engineering firm reviews the scope of work and confirms the budget is realistic for the local market. The same firm handles draw inspections throughout the build. The feasibility study costs approximately $300 and is paid upfront.
How LendSure Home Loans’s Construction Draws Work
FDIC research analyzing nearly 30,000 construction loans found that draw schedules tied to construction milestones are standard practice, and lender monitoring through inspections is associated with lower default rates. LendSure Home Loans’s draw process reflects this:
No construction funds are disbursed at closing. All budget sits in holdback. As each milestone is completed, you submit a draw request. LendSure Home Loans dispatches a third-party inspector within 24 to 48 hours, and funds are wired the next business day after sign-off — directly to you, not to contractors. Interest accrues only on drawn funds, not the full holdback balance. The draw fee is $150 per draw.
LendSure Home Loans finances draws on a pro-rated basis: if 85% of the construction budget is financed, each draw is funded at 85% of the approved amount, with the borrower covering the remaining 15%.
What Happens if Costs Run Over Budget?
Cost overruns are the borrower’s responsibility. If an approved framing budget of $70,000 comes in at $82,000, the additional $12,000 is not automatically added to the loan. This is why a realistic contingency reserve in the original budget matters, and why LendSure Home Loans’s feasibility study at closing serves both parties’ interests.
What Happens When Construction Is Complete?
LendSure Home Loans’s Ground-Up Construction loan is a construction-only structure: the loan covers the build phase, and the exit is either a sale or a refinance into permanent financing.
For spec builds, the loan is paid off from sale proceeds. For build-to-rent projects, LendSure Home Loans can refinance the construction loan into a DSCR loan qualifying on the property’s rental income with no seasoning required if both loans are with LendSure Home Loans. Standard loan terms run 12 or 18 months, with a 24-month option available on exception. There is no prepayment penalty.
Ready to Talk Through Your Project?
For investment transactions, you can share your project details with LendSure Home Loans’s team before submitting a full application. Bring the property or land information, construction budget, plans, builder details, and your prior project experience.
LendSure Home Loans offers Ground-Up Construction financing in Alabama, Arizona, California, Colorado, the District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, New Jersey, North Carolina, Ohio, Oregon, Rhode Island, Tennessee, Texas, Utah, and Virginia. Start the conversation here.
Frequently Asked Questions
Do I need prior construction experience to qualify?
No, but experience affects the leverage available. First-time ground-up builders are considered with more conservative terms. Experience must be verifiable through public records under the borrower’s own name or LLC, not as a participant in someone else’s project.
Does fix-and-flip experience count toward ground-up construction requirements?
Not on its own. Fix-and-flip experience and ground-up construction experience are distinct. A combination of one completed ground-up build and significant renovation experience may be considered case-by-case, but there is no direct substitution. The underwriting question is whether the borrower has demonstrated the ability to manage a project from ground to completion.
Can I get the lot reimbursed if I already own the land?
Yes. LendSure Home Loans can return up to 65% of the lot’s purchase price at closing. If the lot has been owned for more than one year, the appraised as-is value is used instead of the original purchase price. Soft costs such as permits and architectural plans can also be included in the project cost basis.
Do I need permits before I can close on a construction loan?
Permits must be ready or within approximately 25 days of final approval at closing. LendSure Home Loans will not fund a loan if permits are several months away. Builders who complete the permitting process before approaching LendSure Home Loans move through the closing process most efficiently.
What happens if construction costs run over budget?
Cost overruns are the borrower’s responsibility and are not automatically added to the loan. This is why a 10% to 15% contingency reserve built into the original budget is standard practice, and why the third-party feasibility study conducted before closing serves as a realistic cost check.
What are the loan terms and what happens when the build is complete?
Standard terms are 12 or 18 months, interest-only, with a 24-month option available on exception and no prepayment penalty. At completion, the loan is paid off through a sale (spec build) or refinanced into a DSCR rental loan (build-to-rent). If both loans are with LendSure Home Loans, the refinance requires no seasoning period.
