New Construction Loan (also called Ground-Up Construction) finances the build of a new structure from raw or improved land. Funds disburse in draws against verified construction milestones (foundation, framing, mechanicals, finishes).
Structure: 12–24 month interest-only term, 70–85% loan-to-cost (LTC) on the total project (land + hard costs + soft costs), capped at 65–70% loan-to-completed-value. Contingency reserve required (typically 5–10%). Borrower must have demonstrable construction experience or licensed GC on record.
Close timing: 14 days minimum; 20–30 days typical. Permits, plans, and entitlement status are verified pre-funding. Title insurance includes mechanic's lien protection.