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Ground-up construction loans in Washington, DC
Financing to build from the ground up, lot included: new homes, infill rowhouses, tear-down rebuilds and small apartment buildings. Experienced builders can borrow up to 90% of the total project cost.
Construction loan terms
| Experienced builders | up to 90% of cost |
| Standard | up to 85% of cost |
| Limit on finished value | 70 to 75% |
| Lot cost financed | up to 70% |
| First-time builders | programs available |
| Smallest loan | $75,000 |
Builders with fewer recent projects, and smaller markets, are usually limited to 80% of cost.
Two limits decide the loan
Loan-to-cost measures the loan against what you spend on the lot and the build. Loan-to-value measures it against what the finished property will be worth. A construction loan has to fit inside both.
- The lot: up to 70% of what you paid can be financed.
- The whole project: normally up to 85% of cost.
- Experienced builders in major markets: up to 90% of cost.
- Less active builders and smaller markets: usually up to 80% of cost.
- Always: no more than 70 to 75% of the finished value.
Example
| Infill lot | $350,000 |
| Construction budget | $650,000 |
| Total cost | $1,000,000 |
| Finished value | $1,450,000 |
| 85% of cost | $850,000 |
| 90% of cost, experienced builder | $900,000 |
| 75% of finished value, the ceiling | $1,087,500 |
Who qualifies
Your record sets your leverage. Builders with completed projects get the most. First-time builders are not shut out: we have programs for them too.
Building in the District
- Permits and plan review. New construction goes through the Department of Buildings, with zoning review against the 2016 zoning regulations. Plan the schedule, and the loan term, around a realistic permit date.
- Zoning sets the unit count. In the rowhouse (RF) zones, two units are allowed as of right, and more need Board of Zoning Adjustment approval. Confirm the zone and what it permits before you design.
- Accessory apartments. DC’s zoning allows an accessory apartment in many residential zones. It can add rent or resale value, so confirm the lot’s eligibility early.
- Historic districts. Much of central DC lies in historic districts, including Capitol Hill, Georgetown, Shaw, Logan Circle, Mount Pleasant and LeDroit Park. Exterior work there needs historic preservation review as well as a building permit.
- Party walls and neighbors. Infill rowhouse construction shares walls with neighbors. Budget for surveys, underpinning and the agreements that come with them.
- Suburban counties. Montgomery, Prince George’s, Arlington, Fairfax and Alexandria each have their own permit offices and timelines.
From construction loan to rental loan
Many investors build to keep. When the property is finished and leased, a DSCR rental loan pays off the construction loan and replaces it with long-term debt.
Finishing a stalled build
A construction completion loan lends against the project as it stands today and adds what is needed to finish it.
Documents we ask for
- Loan application and personal financial statement
- A line-item construction budget with a clear scope of work. Draws are paid against it
- Plans, drawings and permit status
- Your general contractor’s license, workers’ compensation certificate and recent completed projects
- Your own projects from the last 2 years, with settlement statements
- Two months of bank statements showing reserves
- Insurance and title contacts
The full list is in our hard money loan document checklist.
Construction loans: common questions
Normally up to 85% of the total project cost, and up to 90% for experienced builders in major markets. The loan must also stay within 70 to 75% of the finished value.
Yes. Up to 70% of the lot cost can be financed, as long as the total loan stays inside the loan-to-cost limit.
Yes, as a renovation or construction loan on an investment property. Confirm the zone allows the unit count you plan before you design.
Yes, we have first-time builder programs. Leverage rises with a record of completed projects.
Yes. A construction completion loan is based on the current as-is value plus the cost to finish.
Have a lot and a set of plans?
Send the address, the price and what you plan to do with the property. We will reply with the leverage and pricing that fit your deal.