What “ready” means to a construction lender
| Item | Ready | Not yet |
|---|---|---|
| Land | Owned or closing with the loan | Under LOI only |
| Entitlements | Zoning and site plan approved | Hearing pending |
| Permits | Issued or ready to issue | Plans in review |
| Budget | GC contract or GMP, contingency, interest reserve | Estimate only |
| Equity | Committed and documented | In discussion |
| Takeout | Exit tested on a current lender indication | Assumes rate cuts |
Having these materials ready helps lenders assess the project and propose a closing schedule.
Construction loan options
- Banks: Loan terms depend on project economics, guarantees and the borrower relationship. Review completion and repayment obligations carefully.
- Debt funds: Consider the amount available, funding conditions, interest reserve and repayment plan.
- HUD 221(d)(4): high-leverage, non-recourse multifamily debt for patient sponsors; 9 to 12 months to close.
- C-PACE, mezzanine: to reduce cash equity.
- Construction-to-permanent: one loan covering construction and permanent financing, with conversion conditions to review.
What to send
- Budget, schedule and GC contract or bids
- Entitlement and permit status with dates
- Pro forma and rent or sales comps
- Sources and uses, including equity commitments
- Sponsor bio, completed-project list and schedule of real estate owned
Development financing from land to takeout covers the full sequence.
Frequently asked questions
What do lenders need to close a construction loan?
Site control, entitlements and permits (or a clear date for them), a GC contract or guaranteed maximum price, a full hard and soft cost budget with 5% to 10% contingency, committed equity, plans, a market study or rent comps, and guarantors with the net worth and liquidity to support completion.
How long does a construction loan take to close?
With permits and a GC contract in hand, typically 60 to 90 days from a complete package for banks and 45 to 75 days for debt funds. HUD 221(d)(4) takes 9 to 12 months.
How much equity does a construction loan require?
Banks typically lend 55% to 65% of total cost, so sponsors bring 35% to 45%, including land at cost or appraised value depending on the lender. Debt funds lend to 65% to 80% at higher pricing; mezzanine can fill part of the gap.
What determines the cost of construction debt?
The lender considers project risk, leverage, guarantees, the construction schedule and the repayment plan. Compare interest, fees, reserves and extension terms using a quote for your project.
Other deadlines we work against
Financing on a timeline. Planned around your deadline.
Need to close a commercial real estate loan in 30 days or less? Bridge, debt fund and bank options by timeline, report lead times, and what to send today. $1 million to $200 million.
Acquisition financing, arranged inside the diligence window.
Acquisition financing for commercial properties under contract: get lender term sheets before your deposit goes hard. Bridge, bank, agency, CMBS and life company loans, $1M–$200M.
When a lender steps back, the deal doesn’t have to.
Commercial lender pulled out or retraded before closing? Replacement bridge, debt fund and bank financing on a deadline, plus how to protect your deposit or maturity date.
Upcoming maturities, handled early.
Commercial real estate loan maturing in the next 12 months? Compare refinance, extension, bridge and recapitalization options, and see what your next loan will size to.