Ground-Up Construction and Rehab Completion Loans for Investors
Two of the most common questions we hear from investors don't fit neatly into a standard purchase or refinance: "I want to build a new property from the ground up" and "I'm partway through a renovation and need to finish it." Both are business-purpose loans, but they work differently enough that it's worth understanding each on its own terms.
Ground-up construction: building from land or a teardown
This is financing for a property that doesn't exist yet — either raw entitled land, or a teardown where you're starting fresh. Rather than a single lump-sum closing like a typical purchase, the loan is structured around a construction timeline:
- Financing up to 85% of loan-to-cost, including a financed interest reserve that covers payments through the full construction term
- Terms available at 12, 18, or 24 months, depending on your project's scope
- Funds released in draws as construction milestones are completed and verified — you're not carrying the full loan amount in cash from day one
- Available for attached and detached single-family homes, 2–4 unit residential properties, and entitled land specifically
The interest reserve detail matters more than it might sound like at first. Because it's financed as part of the loan rather than paid out of pocket monthly, you're not making loan payments out of your own cash flow while the property is under construction and generating no income yet.
Rehab completion: finishing what's already underway
This is a different situation — the property already exists, and renovation work has already started, but you need financing to actually finish it. Maybe the initial budget ran short, or you're taking over a project partway through.
- Up to 90% LTV on the purchase itself, plus 100% financing of the remaining rehab costs
- Interest is charged only on funds actually drawn, not the full committed amount sitting unused
- Rehab funds are released in draws as completed work is verified, the same draw structure as ground-up construction
- Particularly useful if you're managing more than one renovation project at once, since it keeps out-of-pocket cash needs lower on each
Which one fits your situation?
| Ground-Up Construction | Rehab Completion | |
|---|---|---|
| Starting point | Raw land or a teardown | An existing property, partway through renovation |
| Financing covers | Land plus full construction costs | Purchase plus remaining rehab costs |
| Term | 12, 18, or 24 months | Structured to your project's remaining timeline |
| Disbursement | Draws as milestones are completed | Draws as completed work is verified |
The draw process, either way
Both loan types share the same core mechanism: rather than handing over the full amount upfront, funds are released in stages as work is actually completed and verified. This protects both you and the lender — you're not paying interest on money sitting unused, and the lender confirms real progress before releasing the next installment. If you haven't worked with a draw schedule before, this is worth walking through before your first project, not during it.
Building, or finishing a project already underway?
Every project's timeline and numbers are different. Let's talk through what actually fits yours.
Schedule a CallThis article is for general educational purposes and isn't a commitment to lend. Program availability, terms, and qualification requirements vary by lender, property, and borrower. Evergreen Mortgage Advisers, LLC — NMLS #2839469. Jennifer Yamamoto, NMLS #259293.