You have a new residential construction project planned out, but now you need to obtain financing. If you started this process by visiting a conventional bank lender, you probably left their office feeling a bit disappointed. Banks have strict lending requirements that prevent many construction projects from obtaining traditional financing. Fortunately, there are other ways to fund your project.
Here’s a look at five lending options for new residential construction projects:
Bridge loans may be an option if you have equity in another property that you can use while building your current project. Taking cash out of your other property can be a faster way of obtaining financing, as your lender won't need to evaluate your construction plan or experience (since they're lending on the completed property).
Construction to Permanent Loans
Construction to permanent loans are available through some banks and offer short-term construction financing, followed by a traditional 30-year loan. In order to qualify for this type of financing from a bank, the borrower must meet all of the requirements for a traditional 30-year loan. These loans are typically designed for homeowners who plan to live in the property after completion, and likely aren't appropriate for investors looking to sell the property.
Private Construction Loans
Some private lenders, like LYNK Capital, offer loans specifically for investors looking to build new construction projects. This lending option can provide flexibility and fast funding, and lenders will typically underwrite these loans primarily based on the property value and your construction experience. Unlike banks, private construction lenders will not typically scrutinize your tax returns and calculate onerous debt-to-income ratios. Most private construction loans, including ours, are not available for owner-occupied properties. If you’re building a new home with the intention of occupying it yourself, this loan is not right for you. Investors and developers can benefit most from private construction loans.
Hard Money Loans
Many private lenders offer hard money loans. These are similar to private construction loans, but are tailored more for borrowers unable to qualify for other forms of financing. Interest rates on hard money loans are typically higher, but more flexibility may be offered in underwriting requirements. Just like private construction loans, hard money loans may not typically be used to finance owner-occupied properties.
Loans from a Private Investor
If you know an investor with cash available and are able to work with them on your new residential construction project, then great! Private investors can offer the most flexibility for your project if they’re willing to negotiate terms. However, unless you know someone who is an investor or someone who can put you in contact with an investor, financing your project with this option will be difficult.
Our Lending Experts are Here to Help
Thinking about a new project? Ready to get an approval? We want to make your life easier with our flexible process and knowledgeable staff. Get started with our online pre-approval and you’ll be one step closer to a fast closing.
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LYNK Capital is a fast-growing hard money lender offering hard money fix and flip loans, rehab and renovation loans, construction loans, and rental property loans. LYNK Capital is a direct private lender that offers lending solutions to real estate investors, contractors, builders, and developers.
Hard Money Fix and Flip Loans
LYNK Capital is your fix and flip lender. We offer hard money fix and flip loans for real estate investors. Fund your rehab or renovation project quickly with competitive interest rates and origination fees. Faster than bank financing with more flexible loan terms. Purchase and refinance options available.
Hard Money Construction Loans
Hard money new construction loans for builders and developers. Fund your new construction project quickly with competitive interest rates and origination fees. Faster than bank financing with more flexible loan terms. Purchase and refinance options available.
Single-family rental loans for real estate investors. Borrow up to 80% of your property value. Finance your investment property quickly and easily.
Where Does LYNK Capital Lend?
LYNK Capital makes hard money fix and flip and construction loans in: Alabama, Connecticut, District of Columbia, Delaware, Florida, Georgia, Illinois, Indiana, Kentucky, Maryland, Massachusetts, Michigan, Missouri, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and West Virginia.
Get a hard money loan for your investment property today with our online rate quote and pre-approval.