Townhome construction loans fund the attached row: four to twelve doors that share walls, a driveway, and usually a small association. The search term sounds like a house loan. The risk is a phase. One wet unit can hold the CO on its neighbor. One missing party-wall agreement can hold the sale.
Jaken Finance Group funds qualified investor townhome construction nationwide at 8.99%–13.5% interest-only. Vertical is sized to the lower of cost and 75% of as-completed value from attached comps. Close targets 10–14 business days when title, plans, and the exit are already in the file. Hold exits use DSCR at 5.75%–10.5% after occupancy.
This is not one detached spec. Use spec and build-to-rent financing for a lone house. It is not a recorded condominium stack — that is condo construction. It is not a 20-door rental community with a clubhouse rendering. That is build-to-rent or a community build only if the pad is already entitled and small.
Apply for a townhome row: new construction · submit a scenario · (833) 264-7776
What counts as a townhome row for this loan
Townhome here means attached dwellings you will sell or rent as separate homes:
- A four- to eight-unit row on recorded lots or air lots
- A short second phase of an existing attached product
- Fee-simple townhomes with a small HOA for the drive, roof, or facade
It does not mean a duplex with one wall and two doors on a house lot. That can be 2–4 unit construction. It does not mean unplatted acreage with a row sketched on a napkin. That is vacant land or subdivision financing until lots exist.
If you still need streets and bonds, stop. Horizontal is not a townhome loan.
Townhome row vs spec SFR vs condo vs BTR
| Townhome row | Detached spec | Condo stack | BTR pod | |
|---|---|---|---|---|
| Structure | Shared walls | Standalone | Stacked units | Houses or rows held as rentals |
| Typical count | 4–12 doors this phase | 1 | 6–20 units | 8–40+ doors |
| Association | Small HOA common | Rare | Full condo HOA | Often a community HOA |
| Comps | Attached sales | Detached sales | Unit sales | Rent and BTR sales |
| Phase risk | High — shared inspections | Low | High — common elements | High — lease-up |
Sponsors blur townhomes and condos because both have neighbors. Underwriters do not. Fee-simple townhomes with a driveway HOA appraise differently than stacked condos with a master policy. Say which legal form you are recording.
Party walls, drainage, and the inspection that holds three doors
Attached construction fails in places a spec house never sees.
Party-wall and easement paper. Each unit needs a legal description that matches the building. If the row still sits on one undivided parcel, you do not have four houses. You have one building. Leverage follows that fact until lots or air lots record.
Shared systems. One roof, one gutter run, one fire wall. A failed fire-caulk inspection on unit 2 can freeze the draw on units 3 and 4. Budget the re-inspection days.
Drainage. Townhome pads concentrate runoff. A civil note that “drains to the alley” is not a stamped plan. We want the civil sheet and a bid for the work.
End unit vs interior. End units often carry the parking and the extra window line. Interior units sell slower in some grids. Do not average four doors at the end-unit price.
The International Code Council townhouse provisions are the model many cities adopt. Local amendments add firewall ratings, sprinklers, and escape windows. Pull the local amendment. Do not underwrite a national brochure.
Two sequences we fund
Sequence A — lots already recorded, then vertical. Four legal lots. One GC. One row. Draws follow foundation, framing, MEP, dry-in, finish, CO. This is the clean townhome file.
Sequence B — one pad, then air lots or a plat. You close on a single parcel. The split or condominium map records. Then vertical. Until the map records, land-like caution applies. We will not size four retail townhomes on one deed and call it efficient.
A row that is 60% framed with a frozen lender is mid-construction refinance. Bring remaining work, liens, and the CO path for each door — not a blended percentage.
Example: six-door row on recorded lots
| Line | Amount |
|---|---|
| Six entitled lots (already owned, as-is) | $360,000 |
| Vertical hard cost (six attached, $215,000 each) | $1,290,000 |
| Soft cost (plans, permits, HOA setup, insurance) | $110,000 |
| Contingency (12% of hard) | $155,000 |
| Interest reserve (12 months @ ~10.5% on rising balance) | ~$105,000 |
| All-in | ~$2.02M |
| As-completed attached comps (6 × $365,000) | $2.19M |
| 75% of as-completed | ~$1.64M |
| Lower of cost vs value cap | $1.64M binds |
The sponsor used detached $410,000 comps from the next block. Attached product on this street trades $365,000. The cap moved down. “Up to 100% of cost” on qualified files still cannot exceed 75% of as-completed attached value. The file that works brings cash, cuts finish, or waits for better comps.
Interest-only at 8.99%–13.5%. Term 12–18 months. Exit: retail sell-out of four doors and a DSCR hold on two at 5.75%–10.5% if leases clear after dues.
If the as-completed target were $900,000 end units in a thin buyer pool, that is luxury texture, not this row.
What dies in underwriting
- Detached comps for attached collateral. Larger lots, no shared wall, different buyer.
- One deed, four-house leverage. Plat or air lots not recorded.
- No HOA or party-wall path on a product that cannot convey without it.
- Phase CO hostage. City will not CO unit 1 until unit 6 is done, and the reserve ignores that.
- Parking that exists only in the rendering. Tandem or alley parking the buyer pool will not accept.
- BTR absorption study on a four-door retail row. Wrong document.
- Owner-occupy the end unit. We finance investment property only.
HOA lite is still an HOA
Townhome rows often use a small association for the drive, snow, and facade. Buyers’ lenders still send a questionnaire. A three-page set of CC&Rs beats a handshake among cousins.
We want:
- Who maintains the shared roof or driveway
- How dues are set in year one
- Whether rentals are allowed if you hold
- Insurance: unit-owners policies plus any master for common elements
If there is truly no association because each lot is fee simple with no shared anything, say that in the first paragraph and show how water, access, and fire walls still work. Most rows are not that clean.
Sell-out vs hold — pick one in the package
Retail sell-out needs a pace. Six doors in a 40-townhome subdivision absorb differently than six doors as the only new attached product on the block. Use attached pendings, not detached DOM.
Hold needs leases and a management plan. Attached rentals still carry HOA and exterior reserves. Model them. Construction interest-only is cheaper than the permanent payment. Files break when the sponsor models carry and forgets takeout.
A mixed exit — sell four, hold two — is fine. Write it down. Do not discover it in month eleven.
What “qualified” means on a townhome row
A GC who has built attached product, pulled firewall inspections, and finished a row in this climate helps more than ten detached flips. Liquidity for a failed shared inspection is not optional.
First-time sponsors with recorded lots, stamped plans, attached comps, and a named HOA attorney can clear. First-time sponsors with a sketch of “townhomes” on a double lot and no split do not.
Credit is reviewed. Approval rides on the lots, the attached value, the GC, and the exit.
Permits that attach to the row, not the unit
Ask the building department:
- Are inspections per unit or per building? If per building, your draw calendar is the slowest unit.
- Do fire walls and penetrations have a dedicated inspection? Budget a fail.
- Can you sell unit 1 before unit 6 has CO? Some cities say no. That is carry.
Utility taps for a row can be one service or six. Capacity fees surprise sponsors who budgeted a single-house tap. Get the written fee.
Model homes, deposits, and the unit you cannot occupy
Builders like to finish the end unit first and use it as a model. That can work. It can also strand a furnished unit that is not in the sell-out calendar.
If the model is for-sale inventory, say when it goes on the market and whether furniture is included. If the model is a hold, it needs a lease path after it stops being a showpiece. Construction interest does not care that the sofa photographs well.
Deposits from reservations help only when they are hard enough to survive a rate change. We will not treat a waiting list as six presales.
Do not live in the model. Owner-occupy kills the file. If you need a construction trailer, rent one. If you need an office, lease one off-site.
Color boards vs as-completed comps
Townhome rows often get upgraded in the last sixty days — designer tile, a roof deck, a package of windows that the comps never had. Buyers may pay. Appraisers may not.
If the as-completed set is builder-grade attached product at $365,000, a $40,000 option package does not automatically become $40,000 of value. It can become a slower sale. Put options in the budget as cost. Do not put them in the value cap unless sold comps with the same options exist.
A row that only works if every buyer pays for the roof-deck option is a fragile file. We would rather see a base product that sells without a miracle.
Utilities, snow, and the shared drive that was “temporary”
A gravel drive “until we sell” is how first closings fail. Buyers’ lenders want a finished surface, legal access, and a maintenance story. If the city requires a paved drive before any CO, that cost belongs in month one of the budget, not month eleven.
Snow storage on a tight row eats a parking stall all winter. If you counted that stall as a space, you no longer have it. Count winter.
Water and sewer laterals for a row can be one tap with private splits or six public taps. Capacity fees follow the city’s rule, not the GC’s guess. Get the will-serve in writing. A $48,000 tap surprise on a six-door row is a reserve event.
Trash: some cities will not service a private drive. A private hauler is an HOA line. Put it in year-one dues.
Package to submit
Attached construction produces a punch list that belongs to more than one deed. Paint overspray on a neighbor’s siding, a grade that sheds onto unit 1, a fence on the wrong lot line — those items hold closings.
Budget a retainage and a walk with the inspector that treats the row as one job. A GC who punches unit 6 and disappears before unit 1’s buyer walk will create liens and angry emails we cannot ignore.
Package to submit
- Lot deeds or the pad deed plus the split/map timeline
- Architectural and civil plans, budget, GC bid
- Party-wall / HOA drafts or a statement that none is required and why
- Attached as-completed comps, not detached
- Exit: sell-out calendar, hold rent roll, or mixed
- Insurance quotes for course of construction and any master policy
If the dirt is still a leftover grid lot, start with infill. If you are building eight to twenty homes with a shared street that you must bond, that is subdivision then vertical, or community build construction when the pad is already entitled.
Starting point across products: new construction loans for investors.
Send the row package — recorded lots, attached comps, party-wall or HOA drafts — through new construction. If the plat is still one deed, submit a scenario first. Get approved · (833) 264-7776
Townhome construction examples are nationwide lending illustrations on investor real estate. Rates, terms, and conditions apply only to qualified borrowers and may change without notice. Jaken Finance Group does not finance owner-occupied housing.