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Ground-up construction loans in New York
Financing to build from the ground up, lot included: new homes, two- and three-family homes, tear-down rebuilds and small apartment buildings. Experienced builders can borrow up to 90% of the total project cost.
Construction loan terms
| Experienced builders | up to 90% of cost |
| Standard | up to 85% of cost |
| Limit on finished value | 70 to 75% |
| Lot cost financed | up to 70% |
| First-time builders | programs available |
| Smallest loan | $75,000 |
Builders with fewer recent projects, and smaller markets, are usually limited to 80% of cost.
Two limits decide the loan
Loan-to-cost measures the loan against what you spend on the lot and the build. Loan-to-value measures it against what the finished property will be worth. A construction loan has to fit inside both.
- The lot: up to 70% of what you paid can be financed.
- The whole project: normally up to 85% of cost.
- Experienced builders in major markets: up to 90% of cost.
- Less active builders and smaller markets: usually up to 80% of cost.
- Always: no more than 70 to 75% of the finished value.
Example
| Lot | $500,000 |
| Construction budget | $1,100,000 |
| Total cost | $1,600,000 |
| Finished value | $2,400,000 |
| 85% of cost | $1,360,000 |
| 90% of cost, experienced builder | $1,440,000 |
| 75% of finished value, the ceiling | $1,800,000 |
Who qualifies
Your record sets your leverage. Builders with completed projects get the most. First-time builders are not shut out: we have programs for them too.
Building in New York
- Zoning and the City of Yes. New York City’s 2024 City of Yes for Housing Opportunity changes allow more housing in many neighborhoods, including accessory dwelling units on many one- and two-family lots. Confirm with your architect what the lot allows before you price the build.
- Department of Buildings. New buildings need approved plans, permits and inspections through the DOB, and a certificate of occupancy before anyone moves in. Plan the schedule, and the loan term, around a realistic approval date.
- Landmarks. Large parts of Brooklyn and Manhattan are landmarked historic districts, including Park Slope, Brooklyn Heights, Fort Greene, parts of Bedford-Stuyvesant and Crown Heights, Harlem and the Upper West Side. Exterior work there needs a Landmarks Preservation Commission permit as well as Department of Buildings approval.
- Neighbors and adjoining property. Excavation and new foundations next to existing buildings often need neighbor access, monitoring and protection. Budget for surveys and the agreements that come with them.
- Long Island and Westchester. Each town, village and city runs its own building department and zoning, and approval times vary widely. Confirm the jurisdiction for the address early.
From construction loan to rental loan
Many investors build to keep. When the property is finished and leased, a DSCR rental loan pays off the construction loan and replaces it with long-term debt.
Finishing a stalled build
A construction completion loan lends against the project as it stands today and adds what is needed to finish it.
Documents we ask for
- Loan application and personal financial statement
- A line-item construction budget with a clear scope of work. Draws are paid against it
- Plans, drawings and permit status
- Your general contractor’s license, workers’ compensation certificate and recent completed projects
- Your own projects from the last 2 years, with closing statements
- Two months of bank statements showing reserves
- Insurance, attorney and title contacts
The full list is in our hard money loan document checklist.
Construction loans: common questions
Normally up to 85% of the total project cost, and up to 90% for experienced builders in major markets. The loan must also stay within 70 to 75% of the finished value.
Yes. Up to 70% of the lot cost can be financed, as long as the total loan stays inside the loan-to-cost limit.
Yes, as long as it is an investment property. Confirm what the zoning allows before you design.
Yes, we have first-time builder programs. Leverage rises with a record of completed projects.
Yes. A construction completion loan is based on the current as-is value plus the cost to finish.
Have a lot and a set of plans?
Send the address, the price and what you plan to do with the property. We will reply with the leverage and pricing that fit your deal.