Home / What is ground up construction
What is ground up construction? A plain guide
Ground up construction means building a new structure from an empty lot, starting with the foundation. Here is how it works and how investors pay for it.
Get my termsNew construction loansSee your terms in seconds
Your loan amount shows as you type. Send the deal and a loan officer follows up.
Estimate only. Loan amount is 90% of lot price plus build budget. Business-purpose loans on investment property, not homes you will live in.
Ground up vs. renovation
A ground up project starts from bare land. A renovation, or fix and flip, starts with a building that already exists. Ground up builds take longer but give you a new home with a modern layout and fewer repairs for the buyer.
The stages of a ground up build
| Typical draw | Work completed |
|---|---|
| 1. Foundation | Slab or foundation poured and inspected |
| 2. Framing | Walls, roof framing and sheathing up |
| 3. Dry-in | Roof, windows, doors and house wrap on |
| 4. Rough-ins | Plumbing, electrical and HVAC run |
| 5. Drywall and interior | Drywall, cabinets, trim |
| 6. Finish | Paint, flooring, fixtures, final inspection |
How ground up construction is financed
Investors usually use a ground up construction loan: one loan that pays for the lot and the build, with the build money released in draws.
| Deal | Amount |
|---|---|
| Lot price | $60,000 |
| Build budget | $260,000 |
| Total cost | $320,000 |
| We fund 90% | $288,000 |
| Sale price when finished | $430,000 |
| You bring (10%) | $32,000 |
Questions builders ask
Straight answers about ground up construction.
What does ground up construction mean?
Building a new structure from an empty lot, starting with the foundation.
How is ground up construction financed?
With a ground up construction loan that covers the lot and the build, paid out in draws.
How much of my build do you fund?
We fund 90% of your total cost: the lot price plus the build budget. You bring the other 10%.
Do I need building experience?
No. We lend to first-time builders with no completed projects, as well as to experienced builders.
More from Ground Up Construction Lending
Loans, tools and guides for investors building new homes.