NEW CONSTRUCTION - Close in 30-45 Days
Build new residential properties with flexible financing. Interest-only draws, 85% LTC, and lenders who understand construction projects. No shortcuts, no surprises.
The Problem
Traditional banks view construction as high-risk and slow down their processes accordingly. The result is lost deals, missed market windows, and financing that doesn't fit how construction actually works.
Traditional lenders categorize construction as commercial real estate. They want 10 years of institutional track record, seasoned net worth, and will ask for unlimited personal guarantees. If you're newer to development, they say no before really analyzing your project fundamentals.
Construction loans at traditional banks take 60 to 90 days to close, with multiple rounds of appraisals, detailed construction reviews, and endless documentation. In a competitive deal environment, that timeline means the seller accepts another offer while you're still getting pre-approved.
Many construction lenders disburse funds quarterly or in large chunks, not aligned with your actual draw schedule. You end up holding cash you don't yet need or struggling with timing mismatches. Interest accrues on the full commitment, not just funds you've actually drawn.
The Solution
Pinnacle Funding Network understands ground-up construction. We structure loans around how projects actually develop, with draw-based funding, experienced inspectors, and real partnerships with builders.
Share project plans, budget breakdown, contractor info, and timeline. We analyze feasibility and provide a pre-approval in as little as 48 hours.
Provide detailed construction documents, contractor estimates, land appraisal if applicable, and your financial statements. This is where we underwrite the project itself.
Our appraiser reviews the property and verifies after-repair value. Our inspector confirms contractor capability. We lock the loan amount based on LTC and LTARV constraints.
Finalize the loan structure, interest rate, draw schedule, and contingencies. We handle title and legal work so you can focus on construction.
Close and fund the loan. As construction progresses, submit draw requests with documentation. We verify work and disburse funds within 3 to 5 business days per phase.
Recent Deal
Developer was building a small townhome complex (4 units) in a strong market. Bank said no because developer was newer to ground-up construction. Pinnacle recognized project fundamentals were sound, closed in 38 days with 82% LTC, and project is now in final phase of construction.
Construction loans operate differently from other real estate financing because the asset doesn't exist yet. Here's how the process actually works, step by step.
A construction loan is a commitment for a specific dollar amount. This commitment is divided into draws tied to construction progress. You don't get all the money at once. Instead, funds are disbursed as construction milestones are completed and verified.
The lender holds a first lien on the property and assigns an inspector (or you hire your own) to verify that work at each milestone meets the contract specifications. Only after inspection sign-off does the lender disburse that draw.
Interest accrues daily on the outstanding balance of drawn funds, not on the total loan commitment. If you've drawn $400K of a $1.2M commitment, you pay interest on the $400K. As you draw more (say, to $600K), interest increases accordingly.
At closing, the lender funds an interest reserve account. This reserve is typically 12 to 18 months of projected interest costs. As interest accrues monthly, it comes from this reserve. Most borrowers never write a check for interest during construction; the draws and the interest reserve handle it.
Your draw timeline is established at closing based on the construction schedule. Typical phases for a single-family home construction are: lot acquisition, site prep and foundation, framing, mechanical/electrical/plumbing rough-in, insulation, drywall, interior finishing, landscaping, and final inspection.
When a phase is substantially complete, your contractor (or you) submits a draw request with documentation: contractor certification of completion, lien waivers from subcontractors who were paid for that phase, and inspection request. Our inspector verifies the work. If everything checks out, the lender releases those funds, usually within 3 to 5 business days.
Two key ratios define how much you can borrow. LTC (loan-to-cost) is the loan amount divided by the total project cost. This includes land acquisition, hard costs, soft costs (permits, design, insurance), and contingencies. Pinnacle offers up to 85% LTC for qualified borrowers.
LTARV (loan-to-after-repair-value) is the loan amount divided by the projected value of the finished property. If your finished townhome will be worth $400K and you borrow $300K, your LTARV is 75%. Pinnacle offers up to 75% LTARV.
Most deals are structured to hit both targets, whichever is more conservative. A project with high soft costs but lower finished value will be constrained by LTARV. A project with significant builder equity will be constrained by LTC.
Pinnacle requires that the builder or the borrower (the entity applying for the loan) demonstrates construction experience. Ideal candidates have completed 3 or more ground-up projects of similar scope and quality. Newer builders with good contractor relationships and strong owner equity can still qualify, but expect closer scrutiny and possibly slightly higher rates.
You don't need to be a professional builder. If you're the borrower, you need solid financials, good credit (typically 680+), and realistic project plans. The project itself must make sense: is the finished value justified by the market? Is the contractor capable? Is the timeline realistic?
Construction loans require comprehensive documentation upfront. Here's what to prepare: architectural plans and specifications; detailed cost breakdown (land, hard costs, soft costs, contingency); contractor bids or estimates; contractor resume showing 3+ comparable projects; builder and borrower personal financial statements; business entity documents and EIN; proof of contractor insurance and bonding; title report or title commitment if land is already owned; preliminary survey; environmental assessment if applicable; photos of the site; and a detailed construction timeline.
Having this ready before you apply speeds the process dramatically. Incomplete applications get delayed in document requests.
At the end of construction, you'll typically need to refinance into permanent financing or sell. If you're building to hold as a rental, you'll refinance into a DSCR loan based on the finished property's projected rental income. If you're building to sell, the buyer will get their own financing. Construction loans are short-term tools designed to get the asset built, not held long-term.
Construction loans typically allow 12 to 24 months from closing to completion, with extension options. Plan your timeline carefully. If construction runs long and you can't refinance, extension fees will apply.
A lender's primary concern is the finished property value. Is that value supported by the market? Will the property appraise at the projected value when construction is done? If the market shifts and finished values decline, the lender's collateral position weakens. Lenders protect themselves by requiring realistic projections, strong builder track records, and market analysis.
This is why we emphasize market selection. Building a spec home in a tight market where finished values are stable is lower risk than building in a soft market. And if you're building to rent (build-to-rent strategy), the rental market fundamentals matter as much as the sales market.
A ground-up construction loan finances the building of a new residential property from the beginning phase through completion. The lender disburses funds in draws tied to construction milestones and completed work, not in a single lump sum. Interest is calculated on the outstanding drawn balance, making it ideal for projects with staged development timelines.
Pinnacle Funding Network offers construction loans from $100K to $5MM and above. Loan amount depends on project cost, land value, projected finished value, builder experience, and market conditions. We work with developers on projects of varying scales from single-family construction to small subdivisions and townhome complexes.
Construction loans typically close in 30 to 45 days, depending on project complexity, permit status, and completeness of documentation. Unlike DSCR loans that focus on existing property cash flow, construction loans require detailed project plans, contractor estimates, and feasibility analysis. Our team coordinates appraisals and feasibility assessments to move quickly without cutting corners.
LTC (Loan-to-Cost) is the loan amount divided by total project cost including land, labor, materials, and soft costs. LTARV (Loan-to-After-Repair-Value) is the loan amount divided by the projected finished property value. Pinnacle offers up to 85% LTC and 75% LTARV, giving you flexibility to structure projects based on your equity position and exit strategy.
At closing, Pinnacle funds the interest reserve and any initial draws. As construction progresses, your contractor requests draws tied to specific milestones: foundation, framing, roof, mechanical rough-in, drywall, final inspection. Our inspector verifies completion of that phase before disbursing funds. This protects your equity and the lender's position. You only pay interest on funds actually drawn, not the full commitment.
Essential documentation includes: detailed construction plans and specifications, contractor estimates or bids, detailed project budget, land appraisal and purchase agreement if applicable, builder resume showing 3+ ground-up projects, builder and borrower personal financial statements, business entity documents (Articles of Organization, EIN), proof of contractor insurance and bonding, title report or commitment, and project timeline. Having complete documentation expedites processing significantly.