Financing a house you're going to build is a different animal from financing one that already stands. With a fix and flip, the lender has a finished asset to appraise and rehab numbers to check. With a ground-up build, there's a lot, a set of plans, and a promise — and the lender is underwriting whether you can turn the first into the third on budget and on time. That's why new construction loan requirements are stricter than almost any other investor loan product.
That doesn't mean they're out of reach. Ground-up financing is one of the most powerful tools in an investor's playbook, letting you create a brand-new asset at a basis well below retail. But you have to walk in knowing what lenders are actually looking for: the experience, the credit, the cash, the budget, and the paper trail that prove you can carry a project from dirt to certificate of occupancy.
This guide breaks down the real new construction loan requirements in 2026 — what every lender checks, how much you'll need to put in, and how the money actually reaches you once you close. At Funded Capital, we're a Miami-based private lender financing investors across 44 states, with new construction loans from 8.75%, up to 85% LTC, and term sheets in two hours.
The Core New Construction Loan Requirements
Every ground-up lender is underwriting the same question from a few angles: can this borrower complete this project? The requirements below are how they answer it. Private lenders like Funded Capital weight the deal and the borrower's track record far more heavily than a bank would weight tax returns — but the fundamentals still have to be there.
Builder or Investor Experience
This is the single biggest factor in a new construction loan, and it's where ground-up financing diverges most sharply from a fix and flip loan. Lenders want to see that you've built or substantially renovated before. A track record of completed projects — ground-up builds ideally, but heavy rehabs count — tells the lender you can manage subcontractors, hold a budget, and hit a timeline.
First-time builders aren't automatically disqualified, but they'll face tighter terms: a lower loan-to-cost, a larger down payment, and closer scrutiny of the general contractor. If you're new to ground-up, the fastest path to approval is partnering with a licensed, experienced GC whose résumé carries the project. The stronger your team's experience, the more leverage the lender will extend.
Credit Score and Financial Profile
Most new construction programs look for a credit score in the mid-600s or higher. Funded Capital and other private lenders are more flexible than banks here — we don't require income verification on most programs — but credit still signals reliability. A clean history of paying obligations on time matters more than a specific magic number.
Beyond the score, lenders check for liquidity and any red flags: recent bankruptcies, foreclosures, or open judgments. They want to see you have reserves to handle cost overruns, because ground-up projects almost always encounter at least one.
A Detailed, Bid-Backed Construction Budget
No lender funds a ground-up build off a napkin estimate. You need a line-item budget covering every phase — site work, foundation, framing, mechanicals, finishes — supported by contractor bids. This budget becomes the backbone of your loan, because it defines both the total project cost and the draw schedule that releases your money.
Shovel-Ready Plans, Permits, and a Realistic ARV
The lender needs to see approved or permit-ready architectural plans and a clear path to entitlement. They'll also order an appraisal of the as-completed value — the projected worth of the finished home, similar to the ARV in a flip. That completed value anchors the whole loan, so the numbers in your plans and your comps have to hold up.
How Much You'll Need to Put In: LTC, LTV, and Down Payment
Ground-up loans are usually sized on loan-to-cost (LTC) rather than the loan-to-value used on stabilized property. Understanding the difference is central to knowing what you'll need at closing — and it's worth reading our full breakdown of LTV vs. LTC if the terms blur together.
LTC measures the loan against your total project cost — land plus hard construction costs. Funded Capital funds up to 85% LTC on new construction, which means you cover roughly 15% of total cost out of pocket, plus closing costs. Many lenders also cap the loan at a percentage of the as-completed value (often 65%–75% LTV), and your loan is bound by whichever limit is lower.
Here's how the two constraints interact on a sample build:
| Line item | Amount |
|---|---|
| Land cost | $150,000 |
| Construction budget | $350,000 |
| Total project cost | $500,000 |
| Loan at 85% LTC | $425,000 |
| As-completed appraised value | $650,000 |
| Loan cap at 70% LTV | $455,000 |
| Maximum loan (lower of the two) | $425,000 |
| Borrower cash required (excl. closing costs) | $75,000 |
In this deal the LTC limit binds before the LTV cap, so the borrower brings roughly $75,000 to the table. If land was already owned free and clear, that equity can often count toward the down payment — a major advantage for investors who lock up a lot early. Run your own numbers through our calculator to see where your project lands.
How the Money Reaches You: The Draw Schedule
A new construction loan doesn't hand you the full amount at closing. You get the land and soft-cost portion up front, and the construction funds are released in stages called draws as the build hits milestones — the same reimbursement model used on rehab loans, which we cover in depth in our guide to the rehab draw schedule.
How Draws Work
You complete a phase — say, the foundation — then request a draw. The lender sends an inspector to verify the work, then releases that portion of the budget. The cycle repeats through framing, mechanicals, drywall, and finishes until the project is complete.
The practical catch is cash flow: on most programs you pay for each phase first and get reimbursed after inspection. That means you need working capital to float the gap between starting a phase and receiving the draw. Fast, predictable draw turnarounds — one of the things private lenders do better than banks — directly reduce your carrying costs, because you're paying interest on the outstanding balance for less time.
Interest and Carrying Costs
On most ground-up loans you pay interest only on the funds drawn to date, not the full loan amount. Early in the build, when little has been disbursed, payments are small; they rise as more of the budget is released. Building this carrying cost into your budget from day one is what separates a profitable project from a squeeze at the finish line.
Get a Ground-Up Loan Built Around Your Project
New construction loan requirements are demanding for a reason — the lender is betting on a building that doesn't exist yet. But the investors who clear them get to manufacture equity at a basis retail buyers can't touch. The key is walking in prepared: experience on the team, credit and reserves in order, a bid-backed budget, and permit-ready plans.
At Funded Capital, we finance ground-up builds across 44 states with no income verification on most programs. Our new construction loans start at 8.75% with up to 85% LTC, we lend to your LLC as standard, and we issue term sheets in two hours with closings in as little as five days. Our draw process is built for speed, so your capital isn't stuck waiting on an inspection while interest runs.
And because we also fund fix and flip, DSCR, and multifamily deals, we can carry you through the full cycle — build on ground-up financing, then refinance the finished, stabilized property into a long-term DSCR loan and hold it as a rental.
Or call us directly: (305) 857-5620 | processing@fundedcapital.com
Place loans for investor clients? Our broker program makes ground-up deals fast and predictable, and our how it works page walks through the full process.
Frequently Asked Questions
What credit score do I need for a new construction loan?
Most ground-up programs look for a credit score in the mid-600s or higher, though private lenders are more flexible than banks. At Funded Capital we weigh your experience, the strength of the deal, and your reserves alongside credit, and we don't require income verification on most programs. A clean recent history — no fresh bankruptcies or foreclosures — matters more than hitting an exact number. Apply now and we'll tell you where you stand.
Do I need construction experience to qualify?
Experience is the biggest single factor in a new construction loan. Lenders strongly prefer borrowers who've completed prior builds or heavy rehabs, because it proves you can manage a project to completion. First-time builders can still qualify — usually with a lower loan-to-cost and a larger down payment — but the fastest path is partnering with a licensed, experienced general contractor whose track record carries the deal.
How much do I have to put down on a ground-up build?
Because new construction loans are sized on loan-to-cost, your down payment is the portion of total project cost the loan doesn't cover, plus closing costs. At up to 85% LTC, that's roughly 15% of land-plus-construction cost. If you already own the land outright, that equity can often count toward your required contribution, reducing the cash you bring to closing.
How is a construction loan different from a fix and flip loan?
A fix and flip loan finances the purchase and renovation of an existing structure, so the lender can appraise a real building and check rehab comps. A new construction loan funds a build from bare land, which carries more risk and stricter requirements — deeper experience, permit-ready plans, and an as-completed appraisal. Both use a draw schedule to release funds in stages as work is completed.
How do construction draws work?
Your construction budget is released in stages tied to milestones — foundation, framing, mechanicals, finishes. You complete a phase, request a draw, the lender inspects the work, and the funds for that phase are released. On most programs you cover each phase first and are reimbursed after inspection, so you need working capital to float the gap. Faster draw turnarounds lower your carrying costs. See our rehab draw schedule guide for a full walkthrough, then apply when you're ready to build.