What is the difference between a ground-up construction loan and a fix and flip loan?

A fix and flip loan finances the purchase and renovation of an existing structure, based on its after-repair value (ARV). A ground-up construction loan finances building a new structure from vacant or scraped land, based on its as-completed value, with a longer term and a more detailed draw schedule tied to construction milestones. Flip = improve what's there; construction = build what isn't.

Which is better for a new build, a construction loan or a fix and flip loan?

For a true ground-up project — vacant land, new foundation, vertical construction — a ground-up construction loan is the correct product; a fix and flip loan isn't designed to fund framing, utilities, and a full build. Fix and flip loans fit existing homes needing cosmetic-to-heavy rehab. Some heavy 'tear-to-the-studs' rehabs sit in between and can go either way depending on scope.

Do construction loans take longer than fix and flip loans?

Yes. Fix and flip terms typically run 6–12 months because the work is renovation. Ground-up construction terms run 12–18 months because building from the ground up takes longer and involves permits, inspections, and more draw stages. Both fund renovation or build capital through a draw schedule rather than a lump sum.

How much can I borrow on a ground-up construction loan vs a fix and flip loan?

At Jaken Finance Group, both fix and flip and new construction go up to 100% loan-to-cost (LTC) on qualified files. Fix and flip leverage is also capped against 75% of ARV; construction leverage is measured against the as-completed value. Strong borrower experience, a realistic budget, and a clear exit drive how close to those ceilings a file gets.

Can a first-time builder get a ground-up construction loan?

Yes, though experience improves terms. Ground-up projects carry more execution risk than a light flip, so lenders weigh your build team, budget accuracy, and exit plan heavily. First-time builders often start with a general contractor of record and a conservative budget — see ground-up construction loans for investors with no experience.

Blog

Ground-Up Construction Loan vs Fix and Flip Loan: Which Is Right for Your Build?

Published July 23, 2026

By Jaken Finance Group · Principal, Jaken Finance Group

Ground-up construction loan vs fix and flip loan compared — draw schedules, terms, leverage, timelines, and which financing fits new builds vs rehabs in 2026.

Ground-up construction loan vs fix and flip loan comes down to building new versus improving existing — a fix and flip loan funds purchase plus rehab against 75% ARV on a 6–12 month term, while a ground-up construction loan funds vertical construction against the as-completed value on a 12–18 month term. Both run on draw schedules rather than lump sums (8.99%–13.5% at Jaken Finance Group), but the timeline, underwriting depth, and risk profile differ enough that using the wrong product stalls the project.

Canonical reference: For rates, terms, and a three-product decision matrix, see DSCR vs Hard Money vs Conventional (2026).

Key stats at a glance

Both products’ rate: 8.99%–13.5% interest-only — Jaken Finance Group, 2026
Fix and flip term: 6–12 months · Construction term: 12–18 months
Fix and flip leverage: up to 100% LTC, capped at 75% ARV
Construction leverage: up to 100% LTC on as-completed value
Fix and flip close: 7–10 business days · Construction close: 10–14 business days
Funding method: milestone draw schedule (both)
Underwriting focus: ARV + scope (flip) vs plans, budget, and build team (construction)

Complete comparison matrix

Factor	Fix and flip loan	Ground-up construction loan
Property state	Existing structure	Vacant / scraped land
Value basis	After-repair value (ARV)	As-completed value
Typical rate	8.99%–13.5% IO	8.99%–13.5% IO
Term	6–12 months	12–18 months
Max leverage	Up to 100% LTC; 75% ARV cap	Up to 100% LTC on as-completed
Funding	Draw schedule (rehab milestones)	Draw schedule (construction milestones)
Draw stages	Fewer — demo, rough, finish	More — foundation, frame, MEP, finish
Permitting	Light-to-moderate	Full site + building permits
Underwriting focus	ARV, scope of work, experience	Plans, budget, GC, entitlements
Close speed	7–10 business days	10–14 business days
Execution risk	Lower	Higher — weather, subs, cost overruns
Exit	Sale or DSCR refi	Sale or DSCR refi
Best fit	Cosmetic-to-heavy rehab	New build, teardown-rebuild, infill
Profit ceiling	Bounded by existing footprint	Full control of design and margin

Source: Jaken Finance Group loan parameters, 2026.

Dollar and timeline impact

Two projects targeting a $500,000 exit value:

Path	Total cost basis	Term	Carry (11% IO, avg 60% drawn)
Fix and flip ($350K all-in, 9 mo)	$350,000	9 months	~$17,300
Ground-up ($400K all-in, 15 mo)	$400,000	15 months	~$33,000

The build carries longer and costs more to hold — but ground-up gives complete control over layout, materials, and end use, which is why builders accept the longer clock in inventory-starved markets. Model each on the fix and flip calculator before locking scope.

Fix and flip loan details

Built for improving an existing property:

Leverage against ARV (Jaken caps at 75% ARV, up to 100% LTC on qualified files)
Draw schedule funds rehab as milestones complete — you don’t front the renovation
Short 6–12 month term matched to a sale or refinance exit
Underwriting weighs ARV, scope of work, and borrower experience
Fast 7–10 business day close for competitive acquisitions

See fix and flip loan requirements, 100% fix and flip financing, and rehab loans for investment property.

Ground-up construction loan details

Built for new vertical construction:

Leverage against as-completed value, up to 100% LTC on qualified files
More granular draw schedule — foundation, framing, mechanicals, finish — with inspections at each stage
Longer 12–18 month term to absorb permitting and build time
Underwriting weighs plans, budget accuracy, the build team, and entitlements
10–14 business day close

New to building? See ground-up construction loans with no experience and the essential guide to construction loans.

Which should you choose?

Follow this decision path:

Is there an existing habitable structure to renovate?
- Yes → Fix and flip loan (unless a full teardown is planned).
- No → Ground-up construction loan.
Is the scope a full teardown-and-rebuild?
- Yes → Construction loan — you’re building new even on an old lot.
- No → Continue.
Does the timeline exceed 12 months?
- Yes → Construction loan — flip terms are too short.
- No → Fix and flip loan.
Do you have plans, permits, and a build team ready?
- Yes → Construction loan is executable now.
- No → Firm up the build package first; a light rehab flip may be the faster deal.
Planning to hold as a rental after completion?
- Either product exits into a DSCR refinance once the property is finished and stabilized.

Side-by-side: documentation requirements

Document	Fix and flip	Ground-up construction
Scope of work / budget	Required	Required (detailed line-item)
Architectural plans	Not typical	Required
Building permits	Sometimes	Required
GC agreement / builder resume	Helpful	Required
Appraisal	ARV	As-completed
Entity docs (LLC)	Usually required	Usually required
Builder’s risk insurance	Required	Required
Reserves	Varies	Contingency reserve standard

Sources

Jaken Finance Group funds both products at 8.99%–13.5%, up to 100% LTC on qualified files — fix and flip (75% ARV, 6–12 months, 7–10 business day close) and new construction (as-completed value, 12–18 months, 10–14 business day close). Compare the full lineup in DSCR vs hard money vs conventional.

Rates, terms and conditions offered only to qualified borrowers and are subject to change at any time without notice. All loans are subject to full underwriting for loan approvals. Jaken Finance Group only finances non-owner occupied investment properties.

Ground-Up Construction Loan vs Fix and Flip Loan: Which Is Right for Your Build? — next step (2026)

Match the product to the scope and clock: rehab an existing home on a flip loan, build new on a construction loan — and price the extra carry before you commit to the longer timeline.

Submit scenario · Pre-qualify · (833) 264-7776.

Frequently asked questions

What is the difference between a ground-up construction loan and a fix and flip loan?: A fix and flip loan finances the purchase and renovation of an existing structure, based on its after-repair value (ARV). A ground-up construction loan finances building a new structure from vacant or scraped land, based on its as-completed value, with a longer term and a more detailed draw schedule tied to construction milestones. Flip = improve what's there; construction = build what isn't.
Which is better for a new build, a construction loan or a fix and flip loan?: For a true ground-up project — vacant land, new foundation, vertical construction — a ground-up construction loan is the correct product; a fix and flip loan isn't designed to fund framing, utilities, and a full build. Fix and flip loans fit existing homes needing cosmetic-to-heavy rehab. Some heavy 'tear-to-the-studs' rehabs sit in between and can go either way depending on scope.
Do construction loans take longer than fix and flip loans?: Yes. Fix and flip terms typically run 6–12 months because the work is renovation. Ground-up construction terms run 12–18 months because building from the ground up takes longer and involves permits, inspections, and more draw stages. Both fund renovation or build capital through a draw schedule rather than a lump sum.
How much can I borrow on a ground-up construction loan vs a fix and flip loan?: At Jaken Finance Group, both fix and flip and new construction go up to 100% loan-to-cost (LTC) on qualified files. Fix and flip leverage is also capped against 75% of ARV; construction leverage is measured against the as-completed value. Strong borrower experience, a realistic budget, and a clear exit drive how close to those ceilings a file gets.
Can a first-time builder get a ground-up construction loan?: Yes, though experience improves terms. Ground-up projects carry more execution risk than a light flip, so lenders weigh your build team, budget accuracy, and exit plan heavily. First-time builders often start with a general contractor of record and a conservative budget — see ground-up construction loans for investors with no experience.

Need financing for your next project?

Talk to a Jaken Finance Group lending specialist about hard money options tailored to your deal.

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Or call (833) 264-7776