# What Is New Construction Financing? | Key Real Estate Capital *New construction financing covers land, labor, and materials until a project is completed and sold or refinanced. See how construction draws work and KREC's construction loan terms.* ## 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. #### Bridge Loans For land or existing-structure acquisitions ahead of a construction closing. ### Frequently asked questions Common follow-up questions about new construction. #### How do construction draws work? #### How much of a construction project can be financed? #### What is required before a construction loan funds? #### How do borrowers exit a construction loan? #### Related questions - [Construction financing vs bridge financing](https://keyrealestatecapital.com/answers#construction-vs-bridge) - [How does funding work?](https://keyrealestatecapital.com/answers#how-does-funding-work) - [How does underwriting work on a private real estate loan?](https://keyrealestatecapital.com/answers#how-does-underwriting-work) - [What information do lenders typically review?](https://keyrealestatecapital.com/answers#what-do-lenders-review) ### Ready to talk through your deal? Share the property and your plan, and a KREC loan specialist will outline the financing structures that fit. Flexible, creative lending solutions to help real estate investors scale their portfolios. 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All rights reserved. Service Hours: 24/7 | Monday - Sunday ## Frequently Asked Questions ### How do construction draws work? Funds are released as verified milestones are completed, confirmed by photo inspections. The draw schedule is built from your line-item construction budget. ### How much of a construction project can be financed? Up to 92.5% of total cost basis, capped at up to 75% of the after-repair (completed) value. Loan amounts range from $100K to $20M. ### What is required before a construction loan funds? Plans, a line-item budget, general contractor verification, builder's risk insurance, adequate reserves, and a defined exit strategy. ### How do borrowers exit a construction loan? Either by refinancing into permanent financing — such as a DSCR rental loan — or by selling the completed property. ## Links - [View new construction details](https://keyrealestatecapital.com/loan-products/new-construction) - [View bridge loans details](https://keyrealestatecapital.com/loan-products/bridge) - [Browse all real estate lending answers](https://keyrealestatecapital.com/answers) - [Contact KREC](https://keyrealestatecapital.com/contact) - [Call (619) 369-4444](tel:619-369-4444) - [San Diego](https://keyrealestatecapital.com/locations/san-diego) - [Phoenix](https://keyrealestatecapital.com/locations/phoenix) - [Dallas-Fort Worth](https://keyrealestatecapital.com/locations/dallas-fort-worth) - [Houston](https://keyrealestatecapital.com/locations/houston) - [Atlanta](https://keyrealestatecapital.com/locations/atlanta) - [Tampa](https://keyrealestatecapital.com/locations/tampa) - [Orlando](https://keyrealestatecapital.com/locations/orlando) - [Miami](https://keyrealestatecapital.com/locations/miami) - [Las Vegas](https://keyrealestatecapital.com/locations/las-vegas) - [Denver](https://keyrealestatecapital.com/locations/denver) - [Charlotte](https://keyrealestatecapital.com/locations/charlotte) - [Nashville](https://keyrealestatecapital.com/locations/nashville) - [Sacramento](https://keyrealestatecapital.com/locations/sacramento) - [Riverside](https://keyrealestatecapital.com/locations/riverside) - [Jacksonville](https://keyrealestatecapital.com/locations/jacksonville) - [San Antonio](https://keyrealestatecapital.com/locations/san-antonio) - [Columbus](https://keyrealestatecapital.com/locations/columbus) - [Indianapolis](https://keyrealestatecapital.com/locations/indianapolis) - [Kansas City](https://keyrealestatecapital.com/locations/kansas-city) - [Memphis](https://keyrealestatecapital.com/locations/memphis) - [Birmingham](https://keyrealestatecapital.com/locations/birmingham) - [Cleveland](https://keyrealestatecapital.com/locations/cleveland) - [Austin](https://keyrealestatecapital.com/locations/austin) - [Privacy Policy](https://keyrealestatecapital.com/privacy-policy) - [Terms & Conditions](https://keyrealestatecapital.com/terms-of-service) - [Anti-Spam Policy](https://keyrealestatecapital.com/anti-spam-email-policy) --- Canonical URL: https://keyrealestatecapital.com/answers/new-construction-financing Markdown URL: https://keyrealestatecapital.com/answers/new-construction-financing.md Agent overview: https://keyrealestatecapital.com/llms.txt Full reference: https://keyrealestatecapital.com/llms-full.txt Sitemap: https://keyrealestatecapital.com/sitemap.xml Related Key Real Estate Capital resources: - Loan programs: https://keyrealestatecapital.com/loan-products - Questions answered: https://keyrealestatecapital.com/answers - Loan calculator: https://keyrealestatecapital.com/calculator - Contact: https://keyrealestatecapital.com/contact Key Real Estate Capital — nationwide private capital lender. 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