Ground-up is the hardest thing to underwrite because there is nothing to look at. What secures the loan is a plan, a budget, a schedule and a builder, and what makes it work is the draw structure: the money releases in stages as each stage is completed and verified, so the lender is never ahead of the build and the borrower is never carrying interest on capital sitting idle.
The published terms are up to 80% LTC including the lot, the build and the interest reserve, on terms of 12 to 18 months, with special approval for loans above $4,000,000. The rate is priced per project rather than published, because a documented, staged build is underwritten on its own budget and schedule rather than on a rate sheet.
The experience requirement is specific and non-negotiable: two ground-up projects. It is the only card in the set that names a number of prior projects, because a first-time builder learning on a live construction loan is the fastest way for both sides to lose money. The FICO floor is 600, documentation is application, SREO and proof of funds, and interest is calculated non-Dutch on the drawing balance with an interest reserve available.
