Ground Up Construction Loans
Building your dream home or commercial property from scratch requires more than just vision and determination. It demands specialized financing that traditional mortgages simply cannot provide. Ground up construction loans offer the financial foundation needed to transform empty lots into thriving properties across California’s diverse landscape. If you want to take advantage of these amazing options, Westpark Loans is here to help.
Traditional mortgages finance completed properties with established values. Our construction loans, however, fund projects based on projected future value. With our ground up construction financing, you’ll have access to short-term solutions designed specifically for building new structures on undeveloped land. Unlike conventional mortgages that provide a lump sum for purchasing existing properties, these loans disburse funds in stages as construction progresses.
Get more done with Westpark Loans, your hard money construction loans broker!
Ground Up Construction Loan Features and Terms
| Feature | Ground Up Construction Loans |
|---|---|
| Loan Type | Construction Financing |
| Lien Position | 1st Position |
| Loan Term | 12-36 Months |
| Interest Rates | Fixed and Adjustable Rates Available |
| Loan Amount | $100,000 – $5,000,000 |
| Leverage | Up To 85 LTC (Loan To Cost) and 100% of Rehab |
| Credit Score | 600 minimum |
| Occupancy | Investment properties only |
| Property Types Allowed | Residential |
| Prepayment Penalty | None |
| Closing Time | 2 weeks |
What is a Ground Up Construction Loan?
Ground up construction loans are specialized financing options designed to cover the costs of building a new property from the ground up.
These loans cater to real estate investors, developers, and individuals looking to construct residential, commercial, or mixed-use properties. Unlike traditional mortgages, ground up construction loans focus on the project’s construction phase, providing the necessary funds to cover materials, labor, and other related expenses.
Ground Up Construction Loan Features and Benefits
Flexible Financing
Customize loan amounts, terms, and interest-only payment options to suit your project’s specific needs.
Comprehensive Coverage
Covers all construction phases, ensuring uninterrupted funding for materials, labor, and finishing touches.
Interest-Only Payments
Pay only interest during construction to better manage cash flow until the project generates revenue.
Streamlined Approval
Quick approval focusing on project viability and property potential, ensuring faster funding.
High Loan-to-Cost Ratios
High LTC ratios minimize out-of-pocket expenses, maximizing available capital for construction.
Who Would Benefit from a Ground Up Construction Loan?
Real Estate Developers: Real estate developers looking to create new residential or commercial properties from the ground up will find ground up construction loans particularly beneficial. These loans provide the necessary funds to cover the costs of land acquisition, construction materials, labor, and other expenses associated with developing a new project. With flexible draw schedules and the ability to finance large-scale projects, developers can ensure their projects are completed on time and within budget.
Small Business Owners: Small business owners planning to build custom office spaces, retail stores, or other business facilities can leverage ground up construction loans. These loans offer the financial support needed to construct tailored spaces that meet specific business requirements, enhancing operational efficiency and creating a professional environment that aligns with their brand. By securing a construction loan, small business owners can avoid the limitations of leasing and invest in property ownership.
Self-Employed Contractors: Self-employed contractors and builders who undertake construction projects for clients can benefit from ground up construction loans. These loans enable contractors to manage cash flow effectively, purchase necessary materials, and hire skilled labor without financial constraints. By accessing construction financing, contractors can take on larger projects, expand their business, and build a reputation for delivering high-quality construction services.
Homebuyers Building Custom Homes: Homebuyers who want to build their dream homes from scratch will find ground up construction loans ideal. These loans provide the flexibility to design and construct a custom home that fits their exact specifications and preferences. With the ability to finance both the land purchase and construction costs, homebuyers can achieve their vision of a perfect home without compromising on quality or design.
Investors in Emerging Markets: Investors looking to capitalize on emerging real estate markets can use ground up construction loans to build new properties in high-demand areas. Whether it’s residential complexes, commercial buildings, or mixed-use developments, these loans offer the financial resources needed to create valuable assets that generate substantial returns. By investing in new construction, investors can take advantage of market growth and secure long-term profitability.
Ground Up Construction Loan Example
Julian and Priya, an environmentally conscious couple, decided to build an eco-friendly home in Los Angeles. They approached Westpark Loans for a ground up construction loan to finance their dream project.
Property Details:
- Location: Los Angeles, California
- Land Cost: $300,000
- Construction Budget: $700,000
- Total Project Cost: $1,000,000
- Loan Amount: $800,000 (80% LTC)
With the help of Westpark Loans, Julian and Priya secured the necessary funding within 45 days. They made interest-only payments during the construction phase, which allowed them to manage their cash flow effectively. Upon completion, their eco-friendly home not only met their sustainability goals but also increased in market value, providing a significant return on investment.
Frequently Asked Questions
The typical loan term ranges from 12 to 36 months.
Yes, these loans can finance residential, commercial, and mixed-use properties.
Funds are typically disbursed in stages as construction progresses.
The minimum credit score requirement is usually 600.
Yes, borrowers typically make interest-only payments during the construction phase.
Client Testimonials
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Our experienced loan officers are available to assist you 24/7 via phone, text, or email. We are committed to providing exceptional service and guiding you through every step of the process. Our website is regularly updated with valuable resources, and we offer a monthly newsletter to keep you informed about the latest industry trends.
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There’s no one-loan-fits-all solution. For more information on our All In One Loans, please contact our licensed Loan Specialists to find the best option for you.