New Construction Loans Explained for Real Estate Investors
New construction loans are designed for investors and builders who are developing properties from the ground up.
Here’s how these loans work and how to find the right lenders for your deal.
What is a new construction loan?
New construction loans are used to finance the ground-up development of residential or investment properties.
These loans typically fund both the land and the construction costs.
How new construction loans work
Funding is released in draws as construction progresses
Loan sizing is based on cost and projected value
Interest-only payments during construction
Requires project planning and timelines
Lender experience requirements are higher
Who new construction loans are for
Builders and developers
Real estate investors building new inventory
Sponsors working on ground-up projects
Brokers placing construction deals
Common mistakes with construction loans
Underestimating build costs
Poor timeline planning
Choosing lenders that don’t support the project
Lack of experience documentation
How LYNDIFY helps you find construction lenders
Lyndify matches your deal with lenders that specialize in new construction financing, so you can align your project with the right capital from the start.
Frequently asked questions about new construction loans
How are new construction loans funded?
New construction loans are typically funded in stages, with draws released as work is completed throughout the project.
Do lenders require construction experience?
Many lenders prefer borrowers or sponsors with relevant construction or development experience, though requirements vary depending on the project and loan structure.
What costs can a new construction loan cover?
Depending on the lender, new construction loans may cover land, hard costs, soft costs, and other project-related expenses.
How does LYNDIFY help with new construction loans?
LYNDIFY helps match new construction deals with lenders that fit the project type, leverage profile, and execution plan before you request quotes.
Related financing guides
Explore other real estate financing strategies:
Stop guessing. Start closing.
If you’re placing new construction loans, knowing which lenders fit before you send the deal saves time and improves execution.
Real Estate Capital, Aligned
Lyndify is a lender matching and capital alignment platform for real estate investment transactions.
Real Estate Capital, Aligned
Lyndify is a lender matching and capital alignment platform for real estate investment transactions.
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