Updated Rates as of August 2026
Construction lenders for investors fund ground-up, spec, and luxury builds with milestone draws. Compare LTC, LTARV cap, IO rate, and extension policy before you break ground.
Best construction lenders — 2026 shortlist
1. Jaken Finance Group — spec and ground-up construction
Best for: Ground-up, spec home, and luxury construction to $2.5M all-in
| Factor | Snapshot |
|---|---|
| Products | Ground-up, spec, luxury scrape, small multifamily construction |
| Leverage | Up to 100% LTC qualified; 75% LTARV cap |
| Rates | 8.99%–13.5% IO |
| Close | 10–14 business days |
| Differentiator | Draw discipline + construction-to-DSCR takeout |
Head-to-head: Jaken vs Kiavi · Lima One vs Jaken
2. Kiavi — national new construction
Best for: Experienced builders on template SFR
| Factor | Snapshot |
|---|---|
| Strengths | Platform + scale |
| Tradeoffs | Luxury/custom complexity |
Kiavi alternatives
3. Local private construction funds — relationship capital
Best for: Repeat local builders with track record
| Factor | Snapshot |
|---|---|
| Strengths | Flexibility |
| Tradeoffs | Inconsistent capacity |
New construction loans
Construction draw schedules and interest reserve
Investor construction loans release funds in milestone draws after third-party inspection — typically 8–12 draws on a 12-month build. Each draw covers completed work only; you float labor and materials between inspections unless the lender pre-funds a holdback. Draw cadence that ignores local permit timelines is the most common reason builds stall mid-project.
Interest reserve is the IO bucket lenders hold at closing to cover payments during construction when the property produces no income. On a $600,000 spec build at 11% IO with a 10-month timeline, reserve might run $55,000 — capital that never hits your GC. Some lenders capitalize reserve into the loan; others require you to fund it at close. Ask which before you model all-in cost.
LTC vs LTARV caps total leverage. Jaken Finance Group offers up to 100% LTC on qualified files, capped at 75% LTARV — you fund the lower of the two. A $500,000 land-plus-build at $700,000 ARV hits the LTARV cap at $525,000 all-in, not $500,000. See understanding loan-to-cost ratios and how much does a construction loan cost.
Spec vs infill — different lender appetite
| Build type | Timeline risk | Typical lender | Jaken Finance Group fit |
|---|---|---|---|
| SFR spec (raw land) | Longer — utilities, grading | Hard money / construction | Up to 100% LTC qualified |
| Infill scrape (existing lot) | Shorter — permits only | Hard money / local fund | 8.99%–13.5% IO, 10–14 business day close |
| Luxury jumbo | Custom plans, longer CO | Specialized | Up to $2.5M all-in |
| Small multifamily (2–4) | Multi-unit inspections | Construction + DSCR exit | Focus metros |
Spec builds carry land carry, entitlement risk, and longer interest reserve. Infill scrapes on entitled lots close faster but still need draw discipline matched to your GC schedule. For spec math, see spec home construction loans and how to finance a spec home build. Exit planning: construction-to-DSCR takeout · when construction-to-DSCR refinance makes sense · ground-up draw schedule explained
How to compare construction lenders — scorecard
Rate alone misleads on ground-up. Score each lender on:
| Factor | Weight | What to ask |
|---|---|---|
| LTC vs LTARV cap | High | ”Fund lower of 100% LTC or 75% LTARV?” |
| Interest on undrawn | High | ”IO on commitment or disbursed only?” |
| Draw turnaround | High | ”Days from inspection to wire?” |
| Extension policy | Medium | ”Fee and max extensions?” |
| Builder approval | Medium | ”Must GC be on approved list?” |
| Takeout relationship | Medium | ”Same shop for DSCR refi?” |
Jaken Finance Group publishes 8.99%–13.5% IO, up to 100% LTC qualified, 75% LTARV cap, 10–14 business day close, with construction-to-DSCR takeout on stabilized rentals.
Worked example — lender comparison on $520K spec
| Lender type | LTC offered | LTARV cap | IO base | 12-mo carry est. |
|---|---|---|---|---|
| National platform | 90% | 70% LTARV | Full commitment | ~$52K |
| Local bank | 80% | 75% ARV | Disbursed only | ~$38K (but 45-day close) |
| Jaken Finance Group | 100% qualified | 75% LTARV | Full commitment | ~$48K, 10-day close |
Lower carry from a bank means nothing if the seller will not wait 45 days — match lender to deal timeline.
Red flags when shopping construction lenders
- Upfront fee before term sheet — walk away
- No draw schedule in writing — disputes at month 6
- Interest calculated on appraised value instead of commitment — overpay
- No extension path disclosed — permit slip becomes default
- Builder must use lender-affiliated GC — conflict of interest
Verify published rates sit within 8.99%–13.5% IO for investor construction — not residential owner-occupant pricing.
Worked example — Chicago infill scrape on entitled lot
A sponsor buys a tear-down lot in Avondale for $185,000 and builds a 2,100 sq ft duplex spec. All-in budget: land $185K + hard $420K + soft $45K = $650,000. ARV at completion: $820,000. Lender offers 100% LTC qualified capped at 75% LTARV — LTARV cap = $615,000, so sponsor brings $35,000 equity despite “100% LTC” marketing.
| Draw milestone | % of hard costs | Wire amount |
|---|---|---|
| Foundation / slab | 15% | $63,000 |
| Framing / rough-in | 25% | $105,000 |
| MEP / insulation | 20% | $84,000 |
| Drywall / finishes | 25% | $105,000 |
| Final / CO | 15% | $63,000 |
Interest reserve on $615,000 commitment at 11% for 11 months = ~$62,000 — capital that never reaches the GC. Chicago lenders who know City of Chicago inspection cadence release draws in 3–5 business days post-inspection; national platforms averaging 7–10 days can leave your framer waiting and stall the next trade. See Chicago rehab costs per square foot.
Draw interest — commitment vs disbursed balance
Construction IO calculation varies by lender and changes total carry $15,000–$40,000 on a 12-month build:
| Interest base | $600K avg balance, 11%, 12 mo | Sponsor impact |
|---|---|---|
| Full commitment from day one | ~$66,000 | Higher carry; simpler budgeting |
| Disbursed balance only | ~$38,000–$44,000 | Lower carry; harder to model month-by-month |
| Commitment with interest reserve holdback | ~$55,000 reserve at close | Cash out of pocket at closing |
Always ask: Is reserve included in LTC or separate from loan amount? Lenders who capitalize reserve into the note increase your effective LTC without increasing cash to the project.
Construction lender fit by build geography
| Market | Build risk | Lender type that fits |
|---|---|---|
| Chicago infill | Permit + winter weather | Focus-market with Chicago inspection draw SLA |
| Florida spec | Hurricane insurance + roof age | Lender requiring bindable insurance before first draw |
| Atlanta scrape | Faster permit; clay soil | Platform or local fund with 10–14 day close |
| Luxury jumbo ($1.5M+) | Custom plans, longer CO | Jumbo-capable to $2.5M all-in at 75% LTARV |
First-time ground-up sponsors should expect 80%–90% LTC until track record is documented — 100% LTC is reserved for repeat builders with sold comp history in the same submarket.
Exit planning before you break ground
Construction without takeout is speculation. Model three exits before you sign the construction note:
- DSCR refi — Will stabilized rent support 1.0+ DSCR at 75% LTV and 5.75%–10.5% permanent rate?
- Spec sale — Is ARV backed by 3 sold comps within 90 days at your finish level?
- Extension + hold — If sale market softens, can you carry 11% IO for 6 more months?
Jaken Finance Group publishes construction at 8.99%–13.5% IO with construction-to-DSCR takeout on stabilized rentals — one relationship from ground break through permanent hold.