Does Grafton Funding offer DSCR loans for rental properties?

Yes — DSCR (Debt Service Coverage Ratio) loans are our most popular product. We lend on single-family rentals, 2–4 unit properties, short-term rentals (like Airbnb and VRBO), and small multifamily up to 10 units. We qualify the property on its rental income rather than your personal income or tax returns. Minimum DSCR is typically 1.0x, and we lend in TX, FL, GA, NC, SC, and other states.

Does Grafton Funding do fix and flip loans or bridge loans?

Yes. We provide fix and flip loans and bridge loans for non-owner occupied investment properties. Our programs cover the purchase price plus rehab costs, with fast closings. Loan terms are short-term (typically 12–18 months) and are designed around the investor's exit strategy — either sale or refinance.

Can I get a DSCR loan for an Airbnb or short-term rental property?

Yes — we specialize in short-term rental (STR) financing. We use either the property's actual Airbnb or VRBO income history or a market-rate STR income estimate to qualify the loan. You don't need W-2s or tax returns.

Does Grafton Funding offer new construction loans for investment properties?

Yes. We offer new construction loans for non-owner occupied residential investment properties, including spec builds, ground-up construction, and lot + build projects. These are short-term loans that fund in draws as construction progresses.

Does Grafton Funding lend in North Carolina?

Yes — we actively lend in North Carolina, including the Charlotte metro, the Triangle (Raleigh/Durham/Chapel Hill), Wilmington, and Asheville. We offer DSCR rental loans, fix and flip loans, and new construction financing for NC investment properties. Local NC line: (910) 218-1286.

Can I qualify for a loan without showing tax returns or personal income?

Yes — our DSCR loans are underwritten based on the property's rental income, not your personal income or tax returns. This makes them ideal for self-employed investors and business owners. We do require a credit check and down payment, but there's no traditional income verification.

What credit score do I need to get a loan from Grafton Funding?

For most DSCR rental loan programs, we generally look for a minimum credit score in the 660–680 range, though this can vary by program and loan-to-value. Fix and flip loans may have different requirements depending on experience and deal strength.

How much do I need to put down for a DSCR loan?

For DSCR rental loans, we typically lend up to 75–80% loan-to-value (LTV), meaning you'd need 20–25% as a down payment. The exact LTV depends on the property type, DSCR ratio, and your credit profile. We lend exclusively on non-owner occupied investment real estate.

How quickly can Grafton Funding close a loan?

Many of our transactions close in 2–4 weeks depending on the loan type, property, and how quickly documentation is provided. We prioritize responsive communication and efficient underwriting for investors who need to move fast on deals.

Does Grafton Funding work with first-time real estate investors?

Yes — we work with both new and experienced investors. For DSCR rental loans, first-time investors are welcome as long as the property cash flows and the borrower meets our credit and down payment requirements. For fix and flip loans, some experience is preferred but not always required.

Ground-Up Construction Loans for Real Estate Investors (2026 Guide)

Q: What's the typical down payment for a ground-up construction loan?

Most lenders require 25–35% of the total project cost (land + construction). Some lenders allow equity in the land to count toward the equity requirement — so if you already own the land free and clear, that value may reduce the cash you need to bring to closing.

Q: How long does it take to get a construction loan approved?

Construction loan approvals typically take 3–6 weeks, longer than a standard purchase loan. The process includes underwriting the borrower, reviewing the construction plans and budget, ordering an as-built appraisal, and verifying contractor credentials. Plan your project timeline accordingly.

4 days ago

4 min read

Ground-up construction loans — also called new construction loans or vertical construction loans — are one of the most powerful tools in a real estate investor's financing arsenal. They allow you to build exactly the property you want, in the location you've chosen, with the specifications that maximize rental income or resale value.

But construction financing works very differently from a traditional purchase mortgage or DSCR loan. Understanding how these loans fund, what lenders look for, and how to structure your project for approval is critical before breaking ground.

Quick Answer: Ground-up construction loans fund the construction of new residential investment properties. They're structured as short-term lines of credit that draw in stages as construction milestones are completed. Typical terms are 12–24 months with interest-only payments on drawn funds. Loan amounts cover land (sometimes) plus construction costs, up to 70–75% of the completed property's as-built value.

How Ground-Up Construction Loans Work

Draw-Based Funding

Unlike a purchase mortgage that funds in one lump sum at closing, construction loans fund in draws — staged disbursements tied to completion of defined construction milestones. Common draw schedules include:

Foundation complete
Framing complete
Rough-in (electrical, plumbing, HVAC) complete
Drywall complete
Finishes and certificate of occupancy

An inspector or lender representative typically verifies completion before each draw is released. You only pay interest on the funds you've drawn — not on the full loan amount.

Interest-Only During Construction

Construction loan payments are interest-only during the construction period. This keeps carrying costs manageable while the project is underway. Once construction is complete, the loan either converts to a permanent mortgage (in a construction-to-perm product) or is paid off by refinancing into a DSCR loan or selling the property.

Loan Term

Most ground-up construction loans have terms of 12–24 months. Extensions are available from many lenders if construction takes longer than projected, though they typically come with fees.

Types of Ground-Up Construction Projects Funded

Build-to-Rent (BTR)

The fastest-growing category in residential construction lending. An investor builds a new single-family home or small multifamily property specifically to hold as a rental. After construction completes, the construction loan is refinanced into a DSCR loan. The new construction property immediately qualifies at a strong DSCR because rents on new builds are typically higher than for older comparable properties.

Spec Homes for Sale

An investor builds a new home without a pre-committed buyer, targeting the resale market. Construction funding is followed by a sale that pays off the construction loan and delivers the profit. Spec home financing typically looks closely at the local resale market and the builder's track record.

Vacation Rental Construction

In high-demand STR markets — the Smoky Mountains, Destin, mountain resort towns — building new vacation rentals from the ground up can be highly profitable. New builds command premium nightly rates and don't require the deferred maintenance that older properties often carry.

ADU (Accessory Dwelling Unit) Construction

Ground-up ADU construction on existing property adds rental income to a property you already own. Some construction lenders offer ADU-specific programs with streamlined underwriting.

Ready to Break Ground?

Grafton Funding provides ground-up construction loans for real estate investors nationwide. Talk to a loan officer about your project today.

GET CONSTRUCTION FINANCING

Ground-Up Construction Loan Requirements

Requirement	Typical Range
Credit Score	680–700 minimum
Equity/Down Payment	15–25% of total project cost
Loan-to-Cost (LTC)	Up to 85–90%
Loan-to-ARV (As-Built Value)	Up to 70–75%
Loan Term	12–24 months
Experience Required	Varies — some lenders require track record
Licensed Contractor	Required at most lenders
Plans and Permits	Required before funding

Key Documents Required for Construction Loan Approval

Signed construction contract with licensed general contractor
Detailed construction budget / scope of work
Approved building plans and permits (or evidence of permit submission)
Project timeline / draw schedule
Proof of land ownership or purchase contract (if land is part of the deal)
Builder's risk insurance
General contractor license and insurance

Frequently Asked Questions: Ground-Up Construction Loans

Do I need construction experience to get a ground-up construction loan?

Requirements vary by lender. Some lenders require that the borrower or their general contractor have a track record of completed projects. Others will work with first-time builders who have an experienced licensed contractor. Discuss your experience level with potential lenders before applying.

Can I act as my own general contractor on a construction loan?

Some lenders allow owner-builder arrangements, but many require a licensed third-party general contractor. Owner-builder programs typically have stricter requirements and may carry higher rates. Check with your lender early — before planning your project around owner-builder assumptions.

How does a construction loan convert to a permanent mortgage?

After construction is complete, you have two options: refinance into a permanent DSCR loan (ideal for build-to-rent investors) or sell the property and pay off the construction loan (ideal for spec builders). Construction-to-perm loans handle both phases under a single closing — convenient but sometimes less flexible than two separate transactions.

What's the typical down payment for a ground-up construction loan?

Most lenders require 10–20% of the total project cost (land + construction). Some lenders allow equity in the land to count toward the equity requirement — so if you already own the land free and clear, that value may reduce the cash you need to bring to closing.

How long does it take to get a construction loan approved?

Construction loan approvals typically take 3–4 weeks, longer than a standard purchase loan. The process includes underwriting the borrower, reviewing the construction plans and budget, ordering an as-built appraisal, and verifying contractor credentials. Plan your project timeline accordingly.