Hard Money Lender Construction Loan

Last updated: October 22, 2025

America needs more homes. Let’s finance them responsibly.

The U.S. is short millions of housing units. From coastal metros to heartland towns, demand outstrips supply, pushing rents and prices higher while many families struggle to find quality housing. New construction—especially single-family and small multifamily—can meaningfully close this gap and help builders build lasting wealth.

OfferMarket partners with experienced investors to make that happen. Our Hard Money Lender Construction Loan is purpose-built for operators who know how to manage risk, budgets, and timelines. If you’ve led heavy renovations or prior ground-up projects, our program helps you move faster with clear underwriting, disciplined draw management, and capital aligned to your scope.

Our aim is simple: streamline your financing, protect your margins, and help you scale—while adding well-built homes to the communities that need them most.

Hard Money Construction Loan Program Guidelines

Risk Management

We underwrite to ensure your success. Across OfferMarket’s private lending business, fewer than 0.35% of originated loans have defaulted, an industry-leading benchmark we protect by aligning leverage with experience, liquidity, and scope complexity.

Ground up is best suited to seasoned operators. For newer builders, we look for compensating factors such as a signed GC agreement, strong liquidity, and excellent credit. High complexity builds are where timelines slip and budgets swell, especially during choppy macroeconomic conditions. Our role is to be your capital partner and risk guardrail: clear expectations, consistent communication, and disciplined draws so you can grow safely.

Initial Advance

Buying a lot or refinancing land you already own? We’ll fund an initial advance against land value and verified soft costs (plans, permits). Projects with permits at closing are eligible for the full 75% initial advance. If permits are pending at closing, we fund 60% up front and release a 15% catch-up once permits are issued.

Experience-based Tiers

We assign an experience tier using verifiable projects you completed. Work older than three years counts at half credit toward your total.

Example:

• Within the past 3 years: 1 verified ground-up project
• More than 3 years ago: 2 verified ground-up projects (counts as 1)
• Total verified experience: 2
• Experience tier: 2

Ground Up Experience Tiers

Rehab Experience Tiers

No ground-up history? Substantial rehab experience can qualify you. Projects older than three years count at half.

Example:

• Within the past 3 years: 5 completed rehabs
• More than 3 years ago: 6 completed rehabs (counts as 3)
• Total verified experience: 8
• Experience tier: 5

Adjustments to Ground Up Experience Tier

Situations that modify your base tier:

Initial Advance, Construction Holdback and LTARV Limits

Total leverage is constrained by cost and value. Our ground-up program targets up to 85% LTFC (land + soft costs + construction budget). If you opt to finance interest payments, leverage may reach 90% LTFC. Example: Full cost = $300,000 → Max loan = $255,000 (85%) or $270,000 (90% with financed interest).

Independently, LTARV caps at 70%. Example: ARV = $450,000 → Max loan by value = $315,000, provided it does not exceed the LTFC cap.

Example Scenarios

No GUC Experience, Strong Compensating Factors

• Credit score: 780 (strong compensating factor)
• Verifiable rehab experience: 5
• Liquid reserves: 25% of loan amount post closing
• GC Engagement Letter: Required (because 0 GUC experience)
• Tier: 2 (eligible)

Although ground-up experience is absent, solid rehab history, a signed GC, excellent credit, and strong liquidity make the file approvable at lender discretion.

Example: No GUC Experience, Weak Compensating Factors

• Credit score: 680
• Verifiable rehab experience: 3
• Liquid reserves: 10% of loan amount post closing
• GC Engagement Letter: Required (because 0 GUC experience)
• Tier: 1 (not eligible)

Limited experience, minimum credit, and thin liquidity do not offset the lack of ground-up track record; this would be declined.

Example: 1 GUC Experience, New Market, Out of State

• Credit score: 720 (strong compensating factor)
• Verifiable rehab experience: 2
• Liquid reserves: 15% of loan amount post closing
• GC Engagement Letter: Required
• Tier: 1 (not eligible)

Cross-market execution adds risk. With modest liquidity and only one prior ground-up, the profile is unlikely to clear.

Transactions involving wholesalers, price run-ups

We can include assignment fees or double-close markups up to 20% of the A–B price in your value basis for the initial advance. Anything above that is excluded. MLS-listed deals may be ineligible for financing the markup. Full contract chain (A–B, B–C) and wholesaler operating agreement are required to confirm an arm’s-length transaction. Finder or referral fees are not financed.

Example:

• A–B Contract: $100,000
• B–C Assignment: $25,000
• As-Is Value: $125,000
• Value basis allowed: $120,000 (20% cap)

Construction Holdback

We reimburse against verified progress per your scope of work. See our overview of Draw Processing. For loans ≥ $100,000, undrawn holdback does not accrue interest (see “As Disbursed”).

Appraisal Requirement

Every ground-up loan requires an appraisal. We may accept exterior-only in specific distressed sale contexts; otherwise a full interior appraisal is needed. We order through an AMC and you pay the invoice; unpaid invoices place files on HOLD. Transfers from other lenders are acceptable with proper AMC ordering and transfer documentation within the aging thresholds below.

Exterior appraisals acceptable for: REO, foreclosure auction, sheriff’s sale, online auction, bankruptcy sale. Dated within 120 days of settlement (re-certify if 120–179 days).

Interior appraisals required for all other cases:

Appraisal transfer requirements:

• Ordered via approved AMC
• ≤180 days old at our closing (re-certify if 120–179 days)
• Transfer letter certifying AIR compliance, plus PDF, XML, and paid invoice

Key Loan Details

Extensions

Short-term capital should stay short. The best way to avoid extensions is disciplined scope selection: use vetted GCs, match scope to team capacity, avoid slow-permit markets, and maintain dual exits (sell or refinance). These practices reduce timeline risk dramatically.

Extension Limits

If you need more time, you can extend up to 50% of your original term in 3- or 6-month blocks.

Extension Terms and Fees

Fees are added to the payoff per schedule:

Extension Prerequisites

Your ground up construction insurance ("builders risk policy") must remain active through the extension period.

Ineligible Property Types

We do not fund:

• Mixed use
• 5+ unit multifamily
• Condos
• Condotels
• Co-ops
• Mobile/manufactured housing
• Commercial properties
• Cabins/Log homes
• Properties with oil/gas leases
• Operating farms, ranches, orchards
• Vacation/seasonal rentals
• Unique/exotic/luxury properties
• Unpaved or dirt roads

Exception scenarios

Considered case-by-case:

• 660–679 guarantor credit score
• Leasehold (ground rent)
• Single-family 500–699 SqFt
• 2–4 unit with one or more 400–499 SqFt units
• Initial advance based on As-Is value higher than cost basis (i.e. land has appreciated in value since purchase)
• Non-arm’s-length transactions
• Financed interest payments

Borrower and Guarantor Requirements

Liquidity verification

We confirm that guarantors collectively hold at least cash to close + 25% of the construction budget in liquid assets. Eligible accounts include personal/business bank or brokerage, and retirement (counted at 50% of balance). Funds can remain in their current accounts; only the cash to close is wired at settlement.

Credit and Background Items

• Three scores returned → use the middle score
• Two scores returned → use the lower score
• No mortgage tradelines → 6 months interest reserves
• Fewer than 5 tradelines → 6 months interest reserves
• Bankruptcy/foreclosure must be >4 years from settlement; 4–7 years may require ≥3 months reserves
• Recent late mortgage pays may be ineligible; LOE required
• Past-due tradelines must be cured prior to funding
• Involuntary liens/judgments must be cleared
• Pending civil cases require LOE; loan committee discretion
• Pending criminal cases → ineligible
• Financial or serious crimes → ineligible; repeat offenses require LOE and committee review

Interest Reserves

Collected at closing (if required) and drawn down against accrued interest before you start making monthly payments.

Financed Interest Payments

To preserve cash during construction, you may qualify to capitalize interest. In that case, accrued interest is added to your payoff rather than paid monthly.

Example:

• Total loan amount: $100,000
• Interest rate: 12%
• Months to payoff: 9
• Accrued interest: $9,000

Payoff statement:

• Unpaid principal balance: $100,000
• Unpaid interest: $9,000

Property Sourcing Guidelines

• New-market builds require a GC agreement or a clear LOE explaining why a GC is unnecessary
• Wholesale spreads and non-arm’s-length deals require full documentation and extra review
• Submit executed contracts, settlement statements, payoff letters (if applicable), track record, and entity docs with each file

Frequently Asked Questions

What states does OfferMarket fund ground up construction loans?

• Arizona
• Alabama
• Arkansas
• California
• Colorado
• Connecticut
• Delaware
• Florida
• Georgia
• Hawaii
• Idaho
• Illinois
• Indiana
• Iowa
• Kansas
• Kentucky
• Louisiana
• Maine
• Maryland
• Massachusetts
• Michigan
• Mississippi
• Missouri
• Minnesota
• Montana
• Nebraska
• Nevada
• New Hampshire
• New Jersey
• New Mexico
• New York
• North Carolina
• North Dakota
• Ohio
• Oklahoma
• Oregon
• Pennsylvania
• Rhode Island
• South Carolina
• South Dakota
• Tennessee
• Texas
• Utah
• Vermont
• Virginia
• Washington
• Washington DC
• West Virginia
• Wisconsin
• Wyoming

(*) In certain states that require an NMLS license for business-purpose lending—or where we do not lend directly—OfferMarket operates as a rate-shopping service and refers your request to a licensed capital provider.

Can I do more than one ground up construction loan at a time?

Yes. Operators with verifiable ground-up history and strong compensating factors (high liquidity, strong credit, GC engagement) can qualify for multi-property portfolios.

Are construction loans commercial?

Yes. These are business-purpose loans to your entity and are treated as commercial credit.

What is the minimum loan amount?

$25,000.

Which property types are eligible?

Eligible:

• Single-family homes
• Multiple townhomes on a block (“row homes”)
• Duplex
• Triplex
• Quadplex

Ineligible:

• 2–4 unit mixed use
• 5+ unit multifamily
• Condos
• Condotels
• Commercial/industrial

How do you calculate Loan-to-Value (LTV)?

For construction loans, “LTV” commonly references LTARV (loan-to-after-repair value). Initial advance is based on the lower of As-Is value and purchase price (or prior purchase price for refinances). LTARV = (initial advance + construction holdback) ÷ appraised ARV.

What are the credit requirements?

Minimum 680 FICO. Scores 660–679 may be considered via exception. We evaluate the scores of guarantors only and use the score of the most experienced guarantor.

What are the experience requirements?

You’ll need proven ground-up history or substantial rehab experience. Complete the Track Record section of your Loan File; we’ll verify each project and may request supporting docs (settlement statements, operating agreements).

Does being a wholesaler count toward experience?

No. Wholesale participation doesn’t demonstrate construction execution or budget/timeline responsibility.

What is builders risk insurance?

Builders risk protects the structure and materials during construction. Coverage varies by carrier/form but often includes fire, wind, hail, vandalism, and theft for buildings under construction, on-site materials (typically within 100 feet), and foundations. Policies generally end upon sale, occupancy/intended use, 90 days after completion, transfer of interest, or project abandonment. Most policies use a Completed Value Form with limits aligned to ARV or replacement cost.

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What documentation is required?

Our Loan File workflow centralizes processing items and speeds approvals. Reusable documents are stored securely for future closings.

Purchase Transaction Requirements

Refinance Transaction Requirements

What is the maximum loan amount?

Transactions over $500,000 receive heightened review for experience, liquidity, and credit. The maximum is $1,000,000 per property and $3,000,000 per portfolio.

Glossary of Key Terms

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OfferMarket is a real estate investing platform. Our private lending arm, OfferMarket Capital LLC, specializes in ground up construction, DSCR, and Fix and Flip loans for 1–4 unit residential projects. We’re here to help you compound wealth through repeatable execution. Let’s partner on your next build!

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