Pre-Construction Financing

Ok lenders and brokers help me out.

I’m looking to get into a pre-construction deal. I have not done a deal like this so any advice good or bad is welcomed.

The purchase price for the townhome is 589K. 10K deposit and then after a due dilligence period, 10% down would be required which would be $58,900. I can come up with the deposit and the downpayment with my lines of credit. But what about the financing part of the 90%? My intentions are to sell this home once its completed. What kind of rates would I be looking at for a 90% LTV on a pre-constrution deal? Do I go into a 1 yr arm, interest only payments, or what? My FICO is 700 if that helps any. Your thoughts are welcomed.


You’re on the right track. However, the best way to get in on preconstrcution is to get lower on the food chain and partake on the supply side. However, you’ll need your contact to read " YOU and/or others" for an easy refi/flip. Some lenders will want you to be there for several months.

Mitch Chapman


Townhome. not commercial… sounds residential.

Q: Have you bought the land? Do you own the land? Is the land broken in by a builder?
Q: Are you the builder? General Contractor? Has your lender approved them?
Q: Are you in need of the contruction phase? Lending for construction is prime +1…
Q: Are you working with an Architect?
Q: do you have a cost breakdown?
Q: What is the time duration of this project?
Q: What state are you in?
Q: Have you spoken with a mortgage broker who knows construction?