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What Is the Exit Strategy for a New Construction Loan?
Last Updated: February 25, 2026A construction loan exit strategy is the plan for how the borrower will repay the loan when it matures. Because new construction loans are short-term by design, lenders want to understand from the start how the borrower intends to exit the financing. In short, a clear and realistic exit strategy is a key part of...
How Do Interest-Only Payments Work on a Construction Loan?
Last Updated: February 25, 2026Most new construction loans are structured as interest only during the build period. This means borrowers pay interest on the drawn loan balance rather than making full principal and interest payments. Understanding how this payment structure works helps investors accurately forecast carrying costs and manage cash flow throughout the project. What Interest-Only Means With a...
Construction Loan Points: 0 Point vs. Deferred Point Options
Last Updated: February 25, 2026Construction loan points are fees charged by lenders at closing, expressed as a percentage of the loan amount. How and when those fees are paid can significantly affect a borrower’s upfront cash requirements and overall project cash flow. AHL offers both a 0 point option and a deferred point option, giving investors flexibility in how...
How Long Does It Take to Close a New Construction Loan?
Last Updated: February 25, 2026Construction loan closing time depends on several factors, including how thorough your documentation is, how quickly the lender completes underwriting, and whether title and legal requirements are satisfied. Understanding what drives the timeline helps investors plan project starts and avoid costly delays. What Affects the Construction Loan Closing Time Several variables influence how long...
What Are the Most Important Construction Loan Documents Lenders Typically Require?
Last Updated: February 25, 2026Construction loan documents differ from a standard investment property loan because lenders are underwriting a project that does not yet exist. In addition to borrower information, lenders need detailed project documentation to assess feasibility, cost, and exit value. Submitting a complete package upfront speeds up the review process and reduces back-and-forth delays. Borrower and...
How Do Lenders Determine the Loan Amount for a New Construction Project?
Last Updated: February 25, 2026The construction loan amount a lender offers is not based on a single number. Instead, lenders evaluate several factors together and use the most conservative result to set the final loan size. Understanding how lenders approach this calculation helps investors structure realistic budgets and avoid surprises during underwriting. Total Project Cost Lenders start by...
What Is a One-Time Close Construction-to-Rental Loan?
Last Updated: February 25, 2026A one-time close construction loan combines the construction financing and the long-term rental loan into a single transaction with one closing, one set of closing costs, and one approval process. This structure is particularly useful for investors who plan to hold the property as a rental after construction rather than selling it. Understanding how it...
Construction Loan Structure vs. Traditional Mortgages
Last Updated: February 25, 2026New construction loans have a fundamentally different loan structure than traditional mortgages. Rather than receiving a lump sum at closing and repaying it over decades, borrowers access funds incrementally as the project progresses and typically repay the full balance upon completion. Understanding these structural differences helps investors plan financing before breaking ground. How Funds Are...
What Property Types Are Eligible for a New Construction Loan?
Last Updated: February 25, 2026Not every property qualifies for new construction financing. Lenders evaluate property type as part of the underwriting process because it affects risk, exit strategy, and market value. Knowing which new construction property types are eligible helps investors structure deals before approaching a lender. Single-Family Residences (SFR) Single-family residences are the most common property type...
How Does the Construction Draw Process Work?
Last Updated: February 25, 2026Construction loans do not release the full loan amount at closing. Instead, lenders release funds in stages throughout the build, and each release is called a draw. Understanding the construction draw process helps builders and investors plan their cash flow, avoid delays, and keep projects on schedule. What a Construction Draw Is A draw...