- Experienced builder or GC — minimum 2 completed ground-up projects
- Clear title to the land (or simultaneous land acquisition in some cases)
- Approved building permits (or commitment letter from jurisdiction)
- Detailed construction budget broken down by trade
- As-completed appraisal supporting the LTC and LTV
- Minimum FICO score of 640 (borrower or personal guarantor)
- Proof of liquidity — reserves equal to 6 months of interest payments
Up to 85% LTC
New Construction Loans
Ground-up financing for residential builders and developers.
Loan Highlights
Loan Amount$200,000 – $5,000,000
Max LTCUp to 85% of total project cost
Interest RateStarting at 11.49%
Term12 – 24 months
Draw ScheduleMonthly progress draws
Close Time7 – 14 business days
PropertySFR, 2–4 unit, townhome/condo
Who This Is For
Our new construction loan is designed for experienced real estate professionals who build residential properties as a business. We are not a first-time homebuilder program — we partner with investors and builders who have a track record and a clear exit strategy.
Experienced residential builders
Spec home builders and custom home contractors with a demonstrated project history. We want to see completed projects, not just plans.
Residential developers
Developers building single-family subdivisions, townhome communities, or small condominium projects. We lend on individual structures within a larger community.
General contractors building for investors
GCs who partner with capital investors benefit from our construction-to-permanent structure. We lend to the entity and can accommodate multiple stakeholders.
Teardown and rebuild investors
Investors who purchase an existing structure for demolition and replace it with a new build. The project is underwritten on the completed property value.
How the Draw Process Works
Construction loans are funded in monthly draws — not a lump sum at closing. This structure aligns disbursements with actual progress and ensures funds are always invested in verified completed work.
1
Loan Approval & Title
Once approved, we order a title search, appraisal of the completed value, and review the builder's plans, permits, and budget. Funds are committed before you break ground.
2
Construction Begins
The first draw is typically released at closing to cover initial site prep and materials. You begin construction on your approved schedule and budget.
3
Monthly Progress Draws
Each month, submit a draw request with an inspection report or photos documenting completed work. Our inspector verifies progress, and funds are wired within 48 hours of approval.
4
Final Draw & Certificate of Occupancy
The final draw is released upon receipt of the certificate of occupancy (CO) and final inspection sign-off. At this point, the project is complete and ready for sale or rental.
Project Requirements
Construction Loan Timeline
From application to final draw, here is what a typical NextRes construction loan looks like from start to finish.
| Phase | Duration | Notes |
|---|---|---|
| Application to Approval | 3 – 5 business days | Underwriting focuses on land value, project plans, and borrower experience |
| Approval to Close | 4 – 9 business days | Title, appraisal, permit review, and final loan documents |
| Construction Period | 6 – 18 months (typical) | Monthly draws; interest accrues only on outstanding balance |
| Final Draw | At CO issuance | Last disbursement upon certificate of occupancy and final inspection |
| Payoff | On sale or refi | Sell or refinance into a permanent loan — no prepayment penalty |
New Construction Loan FAQs
How much experience do I need to qualify for a construction loan?
We require a minimum of two completed ground-up construction projects for our standard construction loan program. For borrowers with less experience, we may still be able to lend with a lower LTC, an experienced GC on the project, or additional collateral. First-time builders who partner with a seasoned general contractor often meet our experience requirements through the GC's track record. Contact us to discuss your specific background.
Does the land need to be paid off to use a NextRes construction loan?
Not necessarily. If you already own the land free and clear, we can lend up to 85% of the total construction budget (not including the land value). If you are purchasing the land simultaneously, we can sometimes structure the loan to include the land acquisition — contact us to discuss. The key underwriting metric is always the loan-to-cost relative to the completed appraised value.
Do I pay interest on the full loan amount during construction?
No. Interest-only payments accrue only on funds that have been disbursed — not on the full committed loan amount. This is called a 'draw loan' structure. For example, if your loan is approved for $800,000 but only $300,000 has been drawn to fund completed work, you pay interest only on $300,000. This keeps your carrying costs lower during the construction period.
What happens if construction runs over budget?
Cost overruns are common in construction, and we plan for them. We require a 10% contingency reserve in the original budget. If costs exceed the contingency, we assess the situation case by case. In some instances, the borrower may need to inject additional equity to maintain the LTC ratio. We strongly encourage detailed budgeting and working with an experienced GC to minimize overrun risk.
Can I refinance the construction loan into a long-term rental loan after completion?
Absolutely. This is sometimes called a 'build-to-rent' strategy, and we support it end-to-end. After receiving your certificate of occupancy and placing a tenant, you can refinance into a NextRes DSCR rental loan with a 30-year fixed term. Because we already know your file from the construction phase, the refinance process is streamlined. There is no mandatory seasoning period.
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“NextRes's high-interest real estate loans gave me true passive income, with complete control and no pressure to invest. It's seamless and easy.”
John S.
NextRes investor
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