Program Overview
New Construction Loans — Ground-Up Financing for Builders & Developers
HQ Lending's new construction loan program provides ground-up financing for residential builders, developers, and investor-builders across 45 states. Whether you're building a single spec home to sell or developing a small subdivision, we connect you with lenders who understand construction timelines, draw schedules, and the realities of the building business.
Unlike conventional construction loans that require full documentation and rigid timelines, our programs are built around the investor-builder — fast approvals, flexible draws, and lenders who don't panic when a city permit takes an extra few weeks.
How the Loan is Structured
Single-Close Construction Loan
One loan covers land equity (or acquisition) and all construction costs. No need to refinance upon completion — funds are disbursed in draws as construction progresses, and interest accrues only on drawn amounts, not the full commitment.
Interest-Only on Drawn Funds Only
You pay interest only on what's been drawn from escrow — not the full loan commitment. A $1M construction loan with $250K drawn means interest payments on $250K. This keeps your monthly carry cost at a minimum during the build phase.
Flexible Draw Schedule (4–6 Milestones)
Draws are released in stages aligned with construction progress. Each draw requires a third-party inspection to verify completed work. Typical stages: foundation, framing, rough-in MEP, drywall/exterior, finish work, final completion.
Land Equity Counts as Your Down Payment
Already own the land? Your equity in the lot can often be used as part or all of your required down payment, reducing your cash contribution significantly. Land purchased within the last 12 months is typically eligible.
Eligible Projects
- Single-family ground-up construction — spec builds and pre-sold homes
- 2–4 unit residential new construction (duplex, triplex, quadplex)
- Tear-down and rebuild projects on existing lots
- Infill development in established neighborhoods
- Small subdivision development (select programs, 2–10 lots)
What You Need at Closing
- Approved building plans (stamped by engineer/architect)
- Active building permit (or permit-ready status)
- Detailed construction budget and scope of work
- Licensed, insured general contractor with verifiable experience
- Signed construction contract between borrower and GC
- Title commitment and survey (if new lot)
Frequently Asked Questions
Do I need to already own the land?
No — some programs allow land acquisition as part of the construction loan (land + build in one loan). If you already own the land, your equity in it typically counts toward your down payment requirement, reducing the cash you need to bring to closing. Land purchased within the last 6–12 months is generally eligible at acquisition cost.
What permits and documentation are needed at closing?
Lenders require approved building plans (stamped), an active building permit or permit-ready confirmation, a detailed construction budget, a signed contract with a licensed general contractor, and the contractor's license and insurance. Some lenders accept permit-pending status with a condition that permits are obtained before the first draw.
Can I be my own general contractor?
Owner-builder (self-GC) loans are available on select programs, primarily for experienced builders with a documented construction track record. Most standard programs require a licensed, third-party GC. If you have prior builds as a self-GC, we can match you with lenders who accommodate this — contact us to discuss your experience level.
How are draws disbursed and how long do they take?
Draws are requested by the borrower, then verified by a third-party inspector who confirms the work is complete per the draw schedule. Once the inspection report is submitted and approved, funds are typically disbursed within 3–5 business days. Keeping your inspector relationship smooth and documentation organized will dramatically speed up your draw cycle.
What if the project goes over budget?
Construction loans are typically approved for a fixed commitment based on your original budget. Cost overruns are the borrower's responsibility — you'll need to fund overages out of pocket or from reserves. This is why lenders require a thorough, realistic budget upfront and why we strongly recommend building in a 10–15% contingency buffer in your original scope of work.
Can I get a loan to build multiple homes at once?
Yes — select programs allow multiple homes under one construction loan (typically 2–5 units in a small subdivision or phased development). Each unit's draw schedule is tracked independently. For larger developments (6+ units), we work with commercial construction lenders on a case-by-case basis. Contact us to discuss your project scope.