Ground-up construction loans are short-term financing solutions that allow experienced real estate investors and developers to build a property from the ground up on raw or vacant land. Unlike traditional renovation or fix-and-flip loans, which work on existing structures or existing homes, these loans fund everything from land acquisition to labor and materials, acting as an entry point to a permanent loan once the project is completed.

These types of loans are commonly used to finance single-family homes, new home construction, multifamily units, mixed-use developments, and even commercial properties. The goal is to provide capital for each stage of the building process, ensuring developers have what they need to take a project from raw land to a fully completed structure.

The short-term nature of ground-up construction loans gives developers the flexibility to complete a project and then refinance, sell, or transition into long-term financing.

How Ground-Up Construction Loans Work

Ground-up construction loans are structured differently from traditional loans. Instead of getting the full amount upfront, borrowers receive funds in stages, based on a draw schedule that matches each phase of the construction process.

Loan Structure and Draw Process

Lenders disburse funds in stages based on progress. This ensures that funds are only released when needed, reducing risk for both parties. A third-party inspector typically verifies completed milestones before additional draws are approved.

Initial disbursement: This usually covers land acquisition and permitting.
Subsequent draws: Typically released on a monthly basis for construction work such as framing, plumbing, roofing, and other construction stages.
Final draw: After a final inspection and the inspector confirms the project has been completed or near completion, a final draw is issued to the borrower.

What Does a Ground-Up Construction Loan Cover?

These loans are designed to finance all core aspects of a new build, offering a flexible structure that supports developers from day one.

Coverage may include the following:

• Land acquisition costs
• Hard costs for materials such as foundation, plumbing, electrical, and framing
• Soft costs such as architectural plans, permits, and holding fees
• Labor and contractor payments
• Property insurance and contingency reserves

Who Qualifies for a Ground-Up Construction Loan?

Not everyone is eligible for a ground-up construction loan. These loans carry higher risk, which is why lenders set clear borrower and project requirements, including an appraisal. While specific criteria vary, certain key elements are consistent across the industry.

Borrower Qualifications

Lenders look for experience, financial stability, and strong creditworthiness. At Leading Edge Commercial Capital, we consider multiple factors rather than just a credit score, but generally, borrowers should have:

Experience: A track record of real estate or construction projects is highly preferred.
Liquidity: Cash reserves to manage unforeseen construction delays or budget overruns.
Exit Strategy: A clear plan to repay the loan, either through refinancing, sale, or rental income.

Project Documentation Requirements

Lenders expect detailed documentation to understand the viability of your project. These may include:

• Approved blueprints and floor plans
• Project timeline with estimated completion dates
• Budget with line-item construction costs
• Permits and zoning approvals
• General contractor information (license, insurance, resume)

Why Choose Leading Edge Commercial Capital for Your Construction Loan?

At Leading Edge Commercial Capital, we specialize in providing ground-up construction financing that moves at the speed of opportunity. Our deep expertise in commercial lending, combined with our streamlined approach, allows us to deliver solutions when time is critical and traditional lenders can’t keep pace.

Our Competitive Advantages:

• Lightning-fast approvals – decisions in as little as 48 hours
• Flexible terms ranging from 12 to 36 months
• Competitive rates with interest-only payment options
• Nationwide lending capability across all 50 states
• Experienced team with decades of commercial construction expertise

Start Your Next Ground-Up Construction Project Today!

If you’re an experienced developer or builder seeking financing for your next construction project, Leading Edge Commercial Capital offers industry-leading financing solutions designed for today’s fast-moving market. With our rapid approval process and flexible terms, you can secure funding and break ground while your competition is still waiting for bank approvals.

To discuss your project and learn more about our competitive financing options, contact Leading Edge Commercial Capital directly or apply now to get a customized quote for your specific construction scenario.