Ground-Up Construction Loans: Finance the Build From Dirt to Done

A ground-up construction loan finances a new building from the first day on the lot. It can cover the land, the hard construction costs and, in many cases, part of the soft costs such as permits, design and utilities. Funds are released in stages as the work is completed, so you only draw what the project has earned.

Cambridge Capital works with builders, developers and investors on new single-family homes, townhomes, spec houses and small multifamily projects. Call 800-826-5077 or read more about our ground-up construction loans to review your project.

How a Ground-Up Construction Loan Works

You submit the plans, budget, timeline and the expected value of the finished building. We review the project, the lot and your experience, then set the loan amount and a draw schedule. After closing, the work moves through stages. Before each draw is released, the progress is verified. When construction is complete, you sell the property or refinance into long-term financing.

1. Apply and submit the project: plans, budget, permits, contractor details and timeline.
2. Underwriting and valuation: we review the budget and the projected value of the completed building.
3. Closing: the lot is acquired or refinanced, and the construction funds are set aside.
4. Draws as you build: funds are released as stages such as foundation, framing and finishes are completed.
5. Exit: sell the finished property, or refinance into a DSCR or commercial loan to hold it.

Key Features of Ground-Up Construction Loans

• Land and construction in one loan: finance the lot and the build together, or fund construction on land you already own.
• Draw-based funding: money is released as milestones are completed, which keeps the project on track.
• Interest on funds drawn: you pay interest on the money used, not the full commitment, during the build.
• Interest reserve options: some structures can build the interest payments into the loan.
• Terms that match the build: typically 12 to 24 months, with options to fit your schedule.
• Many project types: spec homes, custom homes, townhomes, small multifamily and mixed-use.
• Experience-based underwriting: your track record and your builder’s history are part of the decision.
• Flexible exits: sell the finished property or refinance and keep it.

Construction Project Calculator

Test a project before you break ground. Enter your land cost, construction budget and expected value to estimate the loan, the equity you need, the interest during construction and your projected profit. Interest assumes funds are drawn evenly during the build, so the average balance is about half of the construction portion. The rates and leverage shown are examples, not an offer.

Why Choose a Ground-Up Construction Loan?

• Build where homes are scarce: new construction can fill gaps in the market that existing inventory cannot.
• Create value from the ground up: the finished building can be worth more than the land and building costs combined.
• Control the product: choose the layout, finishes and unit mix that fit your buyers or renters.
• Keep your cash free: high leverage on land and construction leaves capital for the next project.
• Pay as you progress: draws tie your funding to completed work, not to a lump sum.

Ground-Up Construction Loans vs. Other Financing

Bank construction loans can cost less, but they often require extensive documentation and usually favor owner-occupants. Ground-up construction loans are built for builders and investors who need speed, high leverage and draw-based funding for spec or rental projects.

Who Are Ground-Up Construction Loans Best For?

These loans fit builders and developers putting up spec homes, investors building rental houses or townhomes, landowners ready to build on a lot they already own, contractors expanding into development, and small multifamily developers. If you have approved plans, a realistic budget and a clear exit, a construction loan can fund the project.

Other Real Estate Loan Options

Not sure which loan fits your plan? Explore our other investment property programs: