Spec Construction Loans for Builders and Investors
Builder Loans for Spec Construction
Hard Money New Construction Loans
What is a spec home construction loan?
Spec Home Construction Loans are a type of loan typically used by builders for constructing multiple properties at once. They are called “spec” loans because the builder does not know specifically who will buy the property after it’s built. The loan is based on the anticipated market value of the property once it’s completed, so there is a measure of risk incurred by the lender in providing this type of financing.
How are Hard Money New Construction Loans and Spec Home Construction Loans different?
Hard money new construction loans are similar to spec construction loans in that they are both short-term and involve a high degree of risk for the lender. Hard money new construction loans, however, provide even more flexibility than spec loans and often come with higher interest rates and points as well. These types of loans can be used when traditional lenders won’t finance a project due to its complexity or other factors like lower credit score on part of the borrower.
In either case, both spec construction loans and hard money new construction loans require extensive paperwork, including detailed plans and cost estimates for the proposed project. It is also important to find an experienced lender that understands all the nuances involved in financing such a high-risk investment. With careful research and planning, these types of loans can be an attractive choice for builders looking to get their projects off the ground quickly without breaking the bank.
Spec Home Construction Loan Financing fast!
Hardmoneyman.com LLC is the market leader for spec home construction loans. We have made thousands of hard money spec home construction loans over the last 2+ decades.
While many lenders claim to make ground up construction loans, we have built houses ourselves and understand exactly what our borrowers are looking for in a lender on their deals.
With our commonsense underwriting and quick closings, you will never look for another lender again after closing your 1st deal with us!!
New construction spec home loans require a lender that understands the whole process from acquiring the lot (or lots and putting the pieces of the land together), to entitlements, permits, approved plans and then most important, closing your loan and getting your draws done quickly.
Submitting your application package for a Ground Up construction loan is quick and easy
Experience | Minimum Credit score | Interest Rate | Points | Advance on Lot Purchase | Advance on Construction | ARV/Loan to Cost | Property Types | Pre-Pay Penalty | Extensions | Blanket Loans | Loan Amounts | Loan Term | Closing Time | Approval time |
3+ New builds last 36 months | 680 mid | 11-13% | 2% or $2500 whichever is greater | Up to 70% | 100% | 70%/80% max | 1-4 unit residential, condos, townhouses | None | Available | No | 100k - 5MM | 12 Months | 7-14 Days | 30 Min from submission |
Hard Money New Construction Loans
These are loans for builders with lots that you’re ready to go vertical on (shovel ready), or houses that need to be torn down and rebuilt, spec homes, model homes for subdivisions.
Overall Loan Criteria for New Construction
- Minimum $150K Completed Value after the build
- 680+ Mid Credit Score
- Minimum 3 or more new builds and sales in the last 36 months
- Rates Starting at 11%
- 12-24 Month Term
- Loan Amounts from $100k – $3M
- This is for 1-4 unit residential and townhouses only
Lot Purchase + Construction
- 680+ Mid Credit
- 50-70% Lot cost
- 100% Construction cost
- 80-90% Total Loan to Cost
- 65-75% Completed Value
- Minimum 3 new build and sales in the last 36 months required
** The above percentages are based on credit and experience
Construction Funds Only (Lot Already Owned)
- 680+ Mid Credit
- 80% Loan to Cost (Price you paid + construction cost x 80% is the max we can lend)
- 65-70% Completed Value
- Minimum 3 new builds and sale in the last 36 months required
** The above percentages are based on credit and experience