Luxury new construction loans fund spec homes and premium infill whose finished value targets $900,000 to $2 million-plus. That is a DuPage teardown competing with Plainfield new subdivisions, a DC row pop-up under historic review, and any collar lot where custom finish is the product.
Standard new construction in Chicago covers infill and three-flat rebuilds. Luxury new construction adds longer timelines, lower leverage, and a listing plan for a narrow buyer pool. Jaken Finance Group prices qualified construction at 8.99%–13.5% interest-only. Close targets 10–14 business days when plans and title are already in the file.
Apply: newbuild. Size conversation: jumbo hard money. Rehab instead of a scrape: luxury fix and flip. Stalled vertical: mid-construction refinance.
Luxury spec versus standard infill
| Standard infill | Luxury spec | |
|---|---|---|
| All-in | $450K–$850K | $950K–$1.8M |
| As-completed / list | $550K–$950K | $1.1M–$2.2M |
| Build time | 8–12 months | 12–18 months |
| Cost leverage | Up to 100% on qualified files | 80%–88% typical |
| Value cap | Lower of cost and 75% as-completed | Same cap, more often binds |
| Days-on-market plan | 30–60 days after CO | 60–120-plus days |
| Exit B | DSCR hold | Listed bridge or DSCR at 70%–75% LTV |
“Up to 100% of cost” on a small qualified spec still cannot exceed 75% of as-completed value. Luxury files hit that ceiling more often because land is expensive and the finished buyer pool is picky.
Why 80%–88% of cost is the honest luxury band
A $1.25 million all-in spec with $1.40 million as-completed comps looks like a winner in a pitch deck. 75% of $1.40 million is $1.05 million. 85% of cost is $1.06 million. The file is already as-completed-bound. There is no extra leverage hiding in the word luxury.
If as-completed comps are only $1.20 million, 75% is $900,000. The sponsor writes a large check or the spec does not start. We will not waive the value cap because the kitchen is Wolf.
Interest-only on a $1.0 million drawn balance at 11% is about $9,200 per month. A 16-month build plus 90 days of marketing is not a 12-month interest reserve. Put the real calendar in the file.
Contingency is 10%–15% of hard cost. Change orders on marble and millwork are how luxury specs blow the first lender and land on mid-construction refinance. Budget it while you still have a choice.
Milestone draws (illustrative)
| Milestone | Share of vertical (typical) |
|---|---|
| Land / acquisition close | 20%–25% |
| Foundation and framing | 20%–25% |
| Mechanical rough-in | 15%–20% |
| Drywall and exterior | 15%–20% |
| Finish and certificate of occupancy | Balance |
Inspection at each gate. We do not front-load finish dollars into a bare frame. Third-party inspection funds in 48–72 hours after a clean report on typical files. Plan days, not hours, between the inspector and the sub.
Winter concrete in the Midwest adds 30–45 days. Historic material review in Georgetown can add a season. Those are not “delays.” They are the job. Local pages own the ordinance texture. This page owns the leverage and the listing.
Collar teardown: send the PIN to Naperville, keep the national math here
Naperville luxury new construction owns dual-county PINs, District 203 versus 204, and when land-cash attaches to a net new lot. Do not copy that essay here.
National rule: a one-for-one scrape on an already-platted lot is a vertical construction file, not a subdivision. A plat that creates extra lots is a small-plat conversation. Mixing those two is how sponsors send the wrong package.
Illinois permit and land-cash context sits on spec home construction loans Illinois. Use it when the city is Chicago or the collar. Use this page when the question is luxury leverage and a $1 million-plus list.
Worked example: Buckhead spec, not a Naperville clone
| Item | Value |
|---|---|
| Lot | $475,000 |
| Hard and soft vertical | $820,000 |
| All-in | $1,295,000 |
| Target list | $1,550,000–$1,650,000 |
| 75% of $1.58 million midpoint | $1,185,000 |
| 84% of cost | $1,088,000 |
| Financing | 84% of cost, 10.25% interest-only, 16-month build |
| Competition | Brookhaven and intown new construction with incentives |
Cost binds near $1.09 million. Sponsor equity is about $207,000 plus reserve. If intown comps only support $1.35 million, 75% is $1,012,500, and the file becomes as-completed-bound. Finish then has to change, or the lot was too expensive.
End buyers may need a bank jumbo. Their 45-day mortgage is month 17 of your interest reserve. Plan luxury bridge if days on market pass 75 without pretending the construction loan can sit unpaid forever.
DC vertical: send HP to Georgetown, keep TOPA honesty here
Georgetown luxury new construction owns Old Georgetown Act timing, Commission of Fine Arts cadence, and seller transfer on high basis. Do not restate those tables.
National rule for DC premium vertical: occupied acquisitions can trigger TOPA. Historic facades can freeze the elevation you already sold in a rendering. New construction loans Washington DC and the TOPA compliance guide are the city tools. Luxury is the leverage cut and the 14–18 month term.
A row pop-up that is really a full rebuild should not close on a six-month flip term. If the first lender already froze draws, use mid-construction refinance.
Slow listing is a product, not a personal failure
Luxury specs often sit. That can be a pricing problem. It can also be a thin buyer pool in January.
| Day after list | Move |
|---|---|
| 60 | Review listed cash-out |
| 90 | Model luxury bridge carry versus a price cut |
| 120 | Dual exit: stay listed or DSCR if rent supports 70%–75% LTV |
Video companion: luxury cash-out while listed. Collar and DC bridge spokes: Chicago collar luxury bridge and DC luxury bridge.
Never promise days on market. Underwrite a 90-day-plus marketing reserve on $1 million-plus specs.
Takeout at certificate of occupancy
Three honest exits.
- Sale. Model about 8% selling costs plus local stamps. A thin spread after 16 months of interest is still a sale file if dual-exit math survives a 10% haircut.
- DSCR hold. Permanent debt on qualified files is 5.75%–10.5%. Construction and just-completed luxury specs take out at 70%–75% LTV, not 85%. Rent must be legal in the finished product.
- Hybrid. Presell or pre-lease so the construction balance drops.
If only the sale works, you have a spec. If neither works, you overpaid for the lot.
File package
- Plans, specifications, and a budget with 10%–15% contingency.
- Licensed general contractor or a guaranteed maximum price with a payment schedule.
- As-completed value support for this product, not a custom from a different corridor.
- Builder’s risk, then replacement-cost insurance after certificate of occupancy.
- Entity documents and proof of liquidity for equity and interest reserve.
- Permit path with winter or historic review named in weeks, not vibes.
- Exit A (list) and Exit B (bridge or DSCR).
GC TBD is a pass. A rendering without a bid is a pass.
Land leftover is still land
If vertical has not started, leftover basis is land. Land-only leverage is typically 50%–65% of as-is value. A rendering of a $1.8 million house does not reprice dirt. Pay for hearings and a build package on a land file, or do not buy the lot.
Once the foundation is in, we underwrite work in place plus remaining cost. That is still construction, not a cash-out on a dream.
First luxury spec without a builder resume
Banks want a stack of prior certificates of occupancy. We will read this GC, this budget, and this as-completed set. First-time sponsors can close when the contractor has finished comparable product and the sponsor has the cash to survive a missed millwork date.
If the GC’s last five jobs were $350,000 rehabs, this is not a comparable resume. Hire the right builder before you ask for a $1.1 million construction loan. Ground-up with limited experience is the honest first-vertical page. Luxury is the tighter leverage version once the product is actually premium.
Who holds the license
Draws follow the licensed contractor of record. A sponsor who “has a guy” is not a draw schedule. Match license class to project value where the city requires it. Keep general liability and builder’s risk current. A lapsed policy is a stop-work order in underwriting even if the city has not noticed yet.
Soft costs that sponsors forget
Luxury specs hide money in architecture, engineering, impact fees, tap fees, and interior design. Those lines are cost. They count toward loan-to-cost. They do not count as as-completed value. A $90,000 design package that does not show up in sold comps is equity you already spent.
Permit expediting is a calendar purchase, not a value purchase. Pay it when the carry on a $1 million balance exceeds the expediter. Do not pay it as a superstition.
Listed inventory and the next lot
Many luxury builders run two lots at once. The finished spec is listed. The next lot deposit is due. That is a luxury bridge file on the finished house, plus a new construction file on the dirt. Do not raid the construction interest reserve to make a land deposit. That is how both jobs stall.
When standard new construction is enough
Sub-$750,000 as-completed value, no listing-carry plan, and no historic overlay: use Chicago new construction or Washington DC new construction on standard leverage. First vertical without a builder resume: ground-up with limited experience. Start page for every construction flavor: new construction loans for investors.
Luxury is not a compliment. It is a tighter box for a more expensive house.
Interest reserve on a long pour calendar
A $1.05 million average construction balance at 11% is about $9,600 per month. Sixteen months of build plus two months of marketing is eighteen months of possible interest, not twelve. Unused reserve can return. Missing reserve cannot be invented at month fourteen.
If you plan to list at certificate of occupancy and also close the next lot, those are two liquidity events. Model both. Luxury bridge can free cash from the finished spec. It cannot replace a construction reserve you never funded.
Change orders after the first slab
The first budget is a guess until the ground is open. Luxury files hide surprises in soils, drainage, and structural steel. A change order is allowed. An undated text message is not. Document the new cost before you ask the next draw to rise. If remaining work plus payoff would break 75% of as-completed value, the extra marble is sponsor cash. We will say that in week one instead of at the last draw. Waiting until the punch list to discover a value bind is how specs sit unfinished. Pull as-completed comps before the second change order, not after the cabinet vendor has already billed. Marble does not raise as-completed value by itself.
Midwest value-add is still a different product
Chicago two-flats, Indianapolis holds, and Detroit value-add remain standard construction or standard hard money when finished value is not a $1 million owner-occupant sale. Detroit hard money expands on that track. Do not paste a Buckhead spec template onto a $420,000 infill and call it luxury so the leverage feels better. Luxury is a tighter box.
Related
- Jumbo hard money loans
- Luxury fix and flip
- Ground-up vs fix and flip
- Spec and build-to-rent
- Subdivision financing — if you actually have lots, not one house
New construction application · Submit scenario · (833) 264-7776
Rates, terms and conditions offered only to qualified borrowers and are subject to change without notice. Closing times are in business days and commence upon receipt of required diligence. All loans are subject to full underwriting. Jaken Finance Group only finances non-owner occupied investment properties.