Ground Up Construction Loan

Last updated: October 22, 2025

America needs more houses. Let's build them.

America faces a historic housing shortage. Across cities, suburbs, and small towns, there simply aren’t enough homes to meet demand. Decades of underbuilding, coupled with population growth and aging housing stock, have created a supply gap of millions of units nationwide. The result is rising rents, inflated home prices, and a growing number of families struggling to find a place to live.

The solution is clear: we must build more homes. Not just large-scale developments, but well-designed single-family and small multifamily properties that serve local communities. Whether the goal is to sell or to hold as rentals, new construction represents one of the most effective ways to expand housing supply while building lasting wealth.

At OfferMarket, we believe experienced real estate investors are uniquely positioned to lead this effort. You understand market dynamics, manage risk, and execute efficiently. That’s why our Ground Up Construction Loan Program is designed specifically for qualified investors —those with a proven track record in heavy renovations or new builds— to empower them to build faster, smarter, and more profitably.

Our mission is to help investors like you streamline the financing process, control project costs, and scale your operations, all while contributing to America’s most urgent economic and social need: more quality housing. Together, we can close the housing gap — one new home, one thriving neighborhood, and one successful investor at a time.

Ground Up Construction Program Guidelines

Risk Management

Our top priority is to help you manage risk. Across OfferMarket's lending business, less than 0.35% of all loans that we have ever originated have defaulted. We take great pride in your success and we strive to achieve the lowest default rate in the private lending industry.

Low experience borrowers that take on projects with an objectively high degree of complexity put themselves in the greatest financial danger. Our ground up construction loan program is designed for experienced investors. If experience is limited, we require strong compensating factors which may include a general contractor engagement letter, high liquidity and super prime credit score.

These "heavy" and "extensive" rehab projects tend to face the most delays, cost over-runs, and and adverse changes in market conditions which can put even high experience and high liquidity borrowers in a difficult position. This is especially true during periods of economic uncertainty.

To be clear, our role as your ground up construction lender is to partner with you on the deal as your deal advisor, risk manager and capital provider. Setting clear and consistent expectations is critical to empower you to safely grow your real estate business. Below, you will learn about our tier-based eligibility to determine if OfferMarket's ground up construction loan program is right for you.

Initial Advance

Whether you're purchasing the lot of land or coming to us to refinance land you already own, we will provide you with a 75% initial advance against the land value and soft costs (i.e. architect plans, permits) you have incurred. If your project is already permitted, you will be eligible for 75% initial advance at settlement. If your project is not yet permitted, you will be eligible for 60% initial advance at settlement and a 15% catch up draw as soon as you obtain your permits.

Experience-based Tiers

Your experience tier is based on verifiable real estate investment projects you have completed. For projects completed greater than 3 years ago, each project will count as 1/2 of a verifiable experience.

For example:

• With the past 3 years: 1 verifiable ground up experience
• Greater than 3 years ago: 2 verifiable ground up experiences
• Total verifiable experience: 2
• Experience tier: 2

Ground Up Experience Tiers

*Rehab Experience Tiers**

If you have no ground up experience, we will consider your eligibility based on verifiable rehab experience. For projects completed greater than 3 years ago, each project will count as 1/2 of a verifiable experience.

For example:

• With the past 3 years: 5 verifiable completed rehab projects
• Greater than 3 years ago: 6 verifiable completed projects
• Total verifiable experience: 8
• Experience tier: 5

Adjustments to Ground Up Experience Tier

Below you will find the scenarios where your ground up experience tier will be adjusted.

Initial Advance, Construction Holdback and LTARV Limits

As a rule of thumb, in our ground up construction program, you will be eligible for a total loan of 85% of your total costs (land price + soft costs + scope of work budget). This is considered LTFC or "Loan-to-Full-Cost". If you finance your interest payments (interest payments are added to your loan amount), then you will be eligible for up to 90% LTFC. For example, let's say your full cost basis is $300,000. Your max loan amount will be $255,000 (85%) or $270,000.

Currently, regardless of tier, your maximum loan-to-after-repair value (LTARV or ARLTV) is 70%. For example, let's say your ARV is $450,000. The max loan amount is $315,000 as long as that is not greater than 85% LTFC or 90% LTFC if you are financing your interest payments.

**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)

In this example, it is the lender's discretion to determine eligibility because the borrower does not have ground up construction experience. Because the borrower has good rehab experience, a GC engagement letter, strong credit score and strong liquidity, the lender is comfortable allowing eligibility.

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)

In this example, it is the lender's discretion to determine eligibility because the borrower does not have ground up construction experience. Because the borrower has limited rehab experience (less than 5 projects), the minimum allowed credit score and the minimum allowed liquidity, the lender is not comfortable allowing eligibility and this application 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)

This is a gray area scenario. Yes, the borrower has GUC experience, however, the subject property is in a new market in which the borrower has no experience and the borrower is out of state. The borrower argues that they have a GC engaged to manage the project but their overall experience, moderate credit score and moderate liquidity make this application unlikely to be approved.

Transactions involving wholesalers, price run-ups

If the land purchase involves a wholesaler, then the entire assignment fee or double-close price run up can be included in the value basis as long as the price run up is not more than 20% of the purchase price between the wholesaler and the seller (owner of record). You will be responsible for any additional component of the price run-up above this limit.

For example:

• A-B Contract (original owner of record and wholesaler): $100,000
• B-C Contract (assignment fee): $25,000
• As Is Value: $125,000
• Value basis for initial advance: $120,000

Wholesaler transaction guidelines:

• OfferMarket can include the assignment fee or double-close price run-up in your cost basis for your initial advance, up to 20% of A-B purchase price
• OfferMarket may decide to not allow the assignment fee or double close price run-up to be financed if the property was listed on the MLS
• OfferMarket requires full chain of contracts/assignments (A-B, B-C) and wholesaler's operating agreement to make sure this is an arm's length transaction
• OfferMarket will not finance finders fees or referral fees

Construction Holdback

The construction holdback component of your loan is provided via draw request and reimbursement for verified progress against your scope of work. Learn more about Draw Processing.

Note that if your total loan amount is $100,000 or higher, then you will not be charged interest on undrawn construction holdback funds (see "As Disbursed" interest accrual).

Appraisal Requirement

An appraisal is required for all OfferMarket ground up construction loans.

For borrowers that meet the above criteria, OfferMarket reserves the right to require an interior appraisal or exterior appraisal per the below sections at its sole discretion.

Exterior appraisal

Exterior appraisals are acceptable in the following scenarios:

• REO sale
• Foreclosure auction
• Sheriff's sale
• Online auction
• Bankruptcy sale

Exterior appraisal must be dated within 120 days of settlement date. If 120 but less than 180 days, then recertification of exterior appraisal is required.

Interior appraisal

Any scenario not mentioned in the above 'Exterior appraisal' or 'In-house valuation' sections will require a full interior appraisal:

Unless in the case of appraisal transfer (see below), OfferMarket will be responsible for ordering the appraisal via appraisal management company (AMC). You will be responsible for completing the AMC's invoice. Loan requests with unpaid appraisal invoice will be moved to HOLD status until invoice is paid.

Appraisal transfer

Appraisals not ordered by OfferMarket are eligible to be transferred to OfferMarket so long as the following conditions are met:

• appraisal was ordered via an approved appraisal management company
• appraisal is less than 180 days old at closing of our loan
• appraisal is re-certified if 120 to 179 days old at closing of our loan
• transferring lender has provided OfferMarket with:
  • signed transfer letter including the following certification "Lender certifies that the Appraisal was ordered and processed in compliance with the Appraiser Independence Requirements (AIR).”
  • Appraisal report (pdf)
  • Appraisal report (xml)
  • Appraisal invoice showing the appraisal has been paid for

Key Loan Details

Extensions

Ground up construction loans are intended to be short-term (12 to 24 months). Extending your GUC loan is not ideal and should be avoided as a matter of best practice. It is important to focus on avoiding the following:

• inexperienced general contractors
• aggressive/ambitious rehab scope relative to experience and liquidity
• markets where zoning and permitting cannot be obtained in an expedient manner
• scenarios where you do not have immediate ability to break ground
• scenarios where there is not a dual exit strategy to sell or refinance
• opting for 12 month term when 18 months would be safer

Controlling for the above will dramatically reduce the risk that your project is delayed and needs to be extended.

Extension Limits

If you have not paid off your loan by the end of your loan term, you can extend for up to 50% of the length of your loan term. Extensions can be requested in 3 month and 6 month increments (see Extension Terms and Fees

Extension Terms and Fees

Extension fees will be added to your payoff statement per the following fee schedule:

Extension Prerequisites

In order to extend your loan, you will need to confirm that your ground up construction insurance policy is in effect for the duration of the extension period.

Ineligible Property Types

The following property types are not eligible for funding in this program:

• Mixed use
• 5+ unit multifamily
• 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

• 660 - 679 guarantor credit score
• Leasehold (ground rent)
• Single family property 500 to 699 SqFt
• 2-4 unit property with one or more unit 400 to 499 SqFt
• Funding initial advance based on As Is value that is higher than Cost Basis
• Non-arms length transactions
• Financed interest payments

Borrower and Guarantor Requirements

Liquidity verification

To ensure a safe amount of liquidity, we verify that the guarantor(s) have a minimum of estimated cash to close + 25% of your rehab budget in liquid assets controlled by one or more guarantor.

Eligible liquid assets:

• Bank account(s) in personal name
• Bank account(s) in borrowing entity name
• Bank account(s) in other business entity name (need to verify operating agreement)
• Brokerage account(s) in personal name
• Brokerage account(s) in borrowing entity name
• Brokerage account(s) in other business entity name (need to verify operating agreement)
• Retirement account(s) in personal name (50% reduction applied due to restricted nature of account)

Important information:

• You do not need to have a business bank account, though this is recommended as a best practice for accounting and risk management.
• Aside from the cash due from borrower (cash to close) which will be confirmed on your settlement statement and wired by you to the title company or real estate attorney facilitating the closing, you do not need to move funds from your verified accounts.

Credit and Background Items

• If 3 credit scores are returned on trimerge report, we use the middle score (2nd highest).
• If 2 credit scores are returned on trimerge report, we use the lowest score.
• If no mortgage tradelines (credit report or private loan verification of mortages, we require 6 months of interest reserves.
• If less than 5 tradelines on credit report, we we require 6 months of interest reserves.
• If bankruptcy on background, discharge date must be greater than 4 years from our settlement date.
• If foreclosure on background, completion date must be greater than 4 years from our settlement date.
• If bankruptcy or foreclosure between 4 years and 7 years from settlement date, we will require a minimum of 3 months of interest reserves.
• If late mortgage payments in past 12 months, we will require LOE and may not be eligible subject to loan committee discretion.
• If past due balances on mortgage and non-mortgage tradelines (i.e. HELOC, HELOAN, credit card) must be paid in full prior to funding.
• If involuntary liens or judgements on background (i.e. tax lien, child support) must be paid in full prior to funding.
• If pending civil lawsuits, LOE required and subject to loan committee discretion.
• If pending criminal lawsuits, not eligible for funding.
• If financial crime on background, not eligible for funding.
• If serious crime on background, not eligible for funding.
• If repeat crime on background, LOE required and subject to loan committee discretion.

Interest Reserves

Interest reserves refer to interest payments collected on the settlement statement and held in servicing escrow. Interest reserves, if applicable to your loan, are applied to your accrued interest and drawn down before you start making your monthly interest payment from your bank account.

Financed Interest Payments

To protect your liquidity and avoid compromising your credit score due to excessive usage of credit cards during your rehab, you may be eligible for financed interest payments. This means that, instead of making monthly interest payments, your interest will be added to your payoff statement.

For example:

• Total loan amount: $100,000
• Interest rate: 12%
• Months held to payoff: 9
• Accrued interest: $9,000 ($100,000 * 12% ÷ 12 months * 9 months)
• Payoff statement:
  • Unpaid principal balance: $100,000
  • Unpaid interest: $9,000

Property Sourcing Guidelines

Key Points:

• New market transactions require a General Contractor agreement or Letter of Explanation for why a GC is not required.
• Properties with previous sale price increases, wholesale deals, and non‑arms length transactions require additional documentation and review.
• All submissions should include purchase contracts, settlement statements, payoff letters (if applicable), track record, and necessary formation documents.

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 states where NMLS license is required for business purpose lending or we do not directly lend, OfferMarket operates as a rate shopping service and refers your loan to a licensed capital provider.

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

Yes, borrowers with verifiable ground up construction experience and strong compensating factors (i.e. high liquidity, high credit score, GC engagement letter) will be eligible for a portfolio (multi-property) .

Are ground up construction loans commercial?

Yes. Ground up construction Flip loans are considered "business purpose" loans and accordingly, because they are issued to your business entity ("borrowing entity"), they are classified as commercial loans.

What is the minimum loan amount?

The minimum loan amount is $50,000.

Which property types are eligible?

Eligible property types:

• Single-family homes
• Multiple townhomes ("row homes", i.e. a full city block)
• Duplex
• Triplex
• Quadplex

Ineligible property types:

• 2-4 unit mixed use

• 5+ unit multifamily

• condos

• condotels

• commercial properties

• industrial properties

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

  For GUC loans, LTV most commonly refers to loan-to-after-repair-value (LTARV). LTV is loan-to-as-is-value. Our initial advance is based on the lower of the As Is value and the purchase price in your contract or the purchase price in your previous closing if this is a refinance transaction. LTARV is the total loan amount (initial advance + construction holdback) divided by the after-repair value determined in our appraisal report.

  What are the credit requirements?

  A minimum FICO score of 680 is required. Borrowers with scores between 660 and 680 may be considered on an exception basis. We look at the credit score of each member of the borrowing entity that will be personally guaranteeing the loan. We do not look at the credit score of members who will not be personally guaranteeing the loan. We use the credit score of the highest experience personally guaranteeing member in the borrowing entity.

What are the experience requirements?

Ground up construction loans require either verifiable ground up construction experience or extensive verifiable rehab experience. Please review the matrices in the guidelines above.

In order for us to verify your experience, you will complete the Track Record section of your Loan File and our underwriting team will research each subject property. We may ask for supplemental documentation such as settlement statement(s), and operating agreement(s) so we can verify your involvement with the project.

Does being a wholesaler count towards experience?

Being a wholesaler in a transaction does not count towards your experience score because you were not financially responsible for successful completion of the rehab/construction of the associated subject property.

What is builders risk insurance?

Builders risk insurance protects your property and on-site construction materials throughout the construction phase of your ground up construction project. Perils covered by your builders risk insurance policy can vary by insurance carrier and your selected form (basic, special) and most commonly include fire, lightning windstorm, hail, falling debris, vandalism, and theft.

• Buildings under construction
• Materials and equipment on premises or within 100 feet
• Foundation

Your builders risk policy is terminated when one of the following events occur:

• Property ownership is transferred to the buyer
• 90 days have elapsed since construction was completed
• Property is occupied or put to its intended use
• Insured's interest in the property ceases
• Insured abandons the construction project with no intention of completion

Most builders risk policies are on a Completed Value Form where the property insurance dwelling coverage policy limit equals the property's ARV or ARV replacement cost estimate.

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What documentation is required?

Our Loan File system is designed to make it easy to complete processing items and expedite loan approval and funding. Documentation that can be used for future transactions will be securely stored in your OfferMarket account to expedite future loan applications.

Purchase Transaction Requirements

Refinance Transaction Requirements

What is the maximum loan amount?

Loans over $500,000 are subject to increased scrutiny of experience, liquidity and credit score. The maximum loan amount is $1,000,000 per property and $3,000,000 for a portfolio loan.

Glossary of Key Terms

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Instant Ground Up Construction Loan Quote

OfferMarket is a real estate investing platform. Our private lending division, OfferMarket Capital LLC, is a leading private lender for real estate investors and we specialize in ground up construction loans, DSCR loans, and Fix and Flip loans for 1-4 unit residential properties. Our mission is to help you build wealth through real estate and we would love the opportunity to partner with you on your next transaction!

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