What is new construction financing?
New construction financing is short-term funding that covers land, labor, and materials for building a property until it is completed and then sold or refinanced. KREC new construction loans run 12, 18, or 24 months, start at 10.25%, cover up to 92.5% of total cost basis, and range from $100K to $20M.
Answered by the Key Real Estate Capital lending team · Updated August 2026
How it works
A construction loan is released in stages. Rather than funding the full budget at closing, the lender advances money against verified progress through a draw schedule tied to the line-item budget, with photo inspections confirming completed work.
The maximum loan is bounded on two sides: loan-to-cost against the total cost basis, and loan to after-repair value — up to 75% of the completed value. KREC finances all non-owner-occupied real estate under this program, with a 600 FICO minimum.
Key considerations
- Plans and a line-item construction budget are required before funding.
- General contractor verification and builder's risk insurance are required.
- Terms are 12, 18, or 24 months, so the build schedule must fit the loan term.
- Adequate cash reserves and a planned exit — refinance or sale — are required.
- Rates start at 10.25% on a non-Dutch, as-disbursed basis, so interest accrues on funds actually drawn.
Who it may be for
Builders and developers funding ground-up projects that conventional lenders typically decline.
Investors converting land or a teardown into a finished, sellable or rentable asset.
Operators who need reliable draw processing to keep a construction schedule on track.
Related KREC financing options
New Construction
Rates from 10.25%, $100K to $20M, up to 92.5% of total cost basis, 12 to 24-month terms, up to 75% LTARV.
View new construction detailsBridge Loans
For land or existing-structure acquisitions ahead of a construction closing.
View bridge loans detailsFrequently asked questions
Common follow-up questions about new construction.
Ready to talk through your deal?
Share the property and your plan, and a KREC loan specialist will outline the financing structures that fit.