New Construction

Private construction loans are short-term loans used to finance real estate construction projects

· There are two main types: loans for renovation of existing projects and loans for new construction

· Private construction loans are intended for builders and real estate investors, not for owner-occupied borrowers

· Ground-up construction loans can be used for residential, commercial, or industrial projects

· Benefits of private construction loans include speed to close, flexible underwriting, and asset-based lending

· Qualifying for a hard money construction loan requires completed architectural plans, engineering, budgets, and a scope of work

· Loan proceeds are disbursed in phases based on a draw schedule and inspections

· Payments for hard money loans are generally interest-only and can be set up as Dutch or non-Dutch

· Borrowers should look for a construction loan lender with experience in private construction loans

· Hard money construction loans may not be suitable for consumers who want to build their primary residence.