Most construction lenders charge you monthly interest on money you haven't even drawn yet. At Axios, your interest is escrowed — you never make monthly payments, and any unused balance is credited back at payoff. That's how construction financing should work.
Get Your Free Loan Consultation Same-day term sheets • Closings in 3-4 weeks • $500K to $100MConstruction financing is a short-term loan designed to fund the building of a new property from the ground up. Unlike a traditional mortgage that finances an existing structure, a construction loan releases funds in stages — called draws — as the project hits predefined milestones like foundation completion, framing, and finishing.
For real estate investors and developers, construction financing covers the full scope of ground-up development: land acquisition, materials, labor, permits, architectural fees, and soft costs. The loan is typically interest-only during the build period, with the principal repaid through a refinance or sale upon completion.
What makes construction lending unique is the draw schedule. Instead of receiving your full loan amount at closing, funds are disbursed as construction progresses and each phase passes inspection. This protects both the lender and borrower by ensuring capital follows actual work completed.
Traditional construction lenders require monthly interest payments during the build — even though you have zero income from the property. At Axios, interest is escrowed into the loan at closing. You make no monthly payments. If you finish early, unused interest is credited back to you. This preserves your liquidity for the things that actually matter: materials, contractors, and contingencies.
Not all construction financing is created equal. The right loan depends on your experience level, project scope, and exit strategy. Here's how the most common real estate construction loan products compare:
| Loan Type | Best For | Typical Term | Leverage | Speed | Pros / Cons |
|---|---|---|---|---|---|
| Ground-Up Construction | New builds, spec homes, townhomes | 12-24 months | Up to 90% LTC | 3-4 weeks | Full project funding Draw schedule Requires plans & permits |
| Bridge-to-Construction | Land acquisition + entitlement, then build | 6-12 mo bridge + 12-18 mo construction | Up to 85% LTC | 3-4 weeks | Acquire before permits Flexible Two-phase process |
| Renovation / Heavy Rehab | Gut renovations, additions, conversions | 6-18 months | Up to 85% of ARV | 3-4 weeks | Fast close Simpler scope Lower max leverage |
| Bank Construction Loan | Owner-occupied, strong credit borrowers | 12-18 months | 80% LTC max | 60-90 days | Lower rates (7-9%) Extremely slow Heavy documentation |
| Hard Money Construction | Credit challenges, unique projects | 6-18 months | 60-75% LTC | 3-10 days | Very fast Flexible criteria Higher rates Lower leverage |
| Mezzanine / JV Equity | Large-scale developments, $5M+ | 18-36 months | Up to 95% of capital stack | 2-4 weeks | Maximum leverage Partnership approach Profit share required |
At Axios, we offer ground-up construction loans, bridge-to-construction financing, mezzanine debt, and joint venture equity. Our products range from $500K to $100M, with leverage up to 90% LTC for experienced builders.
Tell us about your deal and we'll structure the most advantageous financing for your situation.
Talk to a Loan SpecialistConstruction lending has more moving parts than a standard bridge loan or acquisition financing. Here's how it works from first call to final draw — and how Axios makes each step faster.
You share your project details — location, scope, budget, timeline, and exit strategy. We evaluate the deal and issue a same-day term sheet if it qualifies. No waiting weeks for a committee decision.
We review your construction budget line by line, help you identify cost overruns before they happen, and structure the loan to maximize your leverage. This is where our hands-on approach matters — we don't just underwrite, we help you build a better budget.
We order a feasibility study or as-complete appraisal to validate the after-repair value (ARV). Title, environmental, and entity documentation are cleared in parallel to keep the timeline tight.
Loan documents are executed and initial funds are released — typically covering land acquisition and the first construction draw. Interest is escrowed at closing, so there are no monthly payments during the build.
As construction progresses, you submit draw requests at each milestone. We arrange inspections and release funds the same day they're approved. No waiting 3-5 business days like other lenders — same-day draws keep your contractors paid and your project on schedule. Your draw schedule is agreed upon upfront so there are no surprises.
When construction is complete, you execute your exit strategy: sell the property, refinance into permanent financing (DSCR or conventional), or stabilize with tenants and hold. Any unused escrowed interest is credited back to you at payoff.
Private construction lenders evaluate deals differently than banks. At Axios, we underwrite based on the asset quality and your execution strategy — not just your tax returns.
Tier 1 (Emerging): 0-2 completed projects — 65-75% LTC, licensed GC required.
Tier 2 (Established): 3-9 completed projects — 75-85% LTC, flexible GC requirements.
Tier 3 (Expert): 10+ completed projects — up to 90% LTC, builder-as-borrower eligible.
Here's something most lenders won't do: at Axios, your general contracting (GC) experience counts toward your experience tier — even if you've never closed a real estate investment deal. If you've spent years building homes, managing construction crews, and delivering projects as a GC, that track record matters to us. A builder with 15 years of GC experience but zero investment deals can qualify for our highest experience tier and best loan terms. Most lenders only count completed investment transactions — we count your construction track record because it's what actually predicts project success.
The 2026 rate environment has stabilized after the volatility of 2023-2024. Here's what construction borrowers should expect:
These rates are higher than bank construction loans (7-9%), but private lenders close in weeks instead of months, require less documentation, and offer significantly higher leverage. When you factor in holding costs saved by closing 30+ days faster, the effective cost difference narrows substantially.
Residential construction demand remains strong driven by persistent housing undersupply in most US metros. Material costs have normalized from their 2022 peaks, and labor availability has improved with increased skilled-trade training programs. Investors who can move quickly on entitled land are finding excellent opportunities — especially in suburban infill and secondary markets.
With Axios's escrowed interest structure, you don't make monthly payments during construction. If your project completes ahead of schedule, unused interest is credited back. On a 12-month construction loan that finishes in 9 months, you could save 3 months of interest — a material difference on a $2M+ loan.
Get a same-day term sheet with your rate, leverage, and estimated costs.
Get Your Free Term SheetYou have options. Banks, hard money shops, online lenders. Here's why experienced real estate investors keep coming back to Axios:
This is the single biggest differentiator. During construction, you have zero income from the property. Every other lender expects you to make monthly interest payments anyway. At Axios, interest is escrowed into the loan at closing. You pay nothing out of pocket each month, and unused interest is credited back when you pay off the loan. This preserves your capital for the build itself.
We don't just wire money and wish you luck. Axios helps you structure your deal for maximum returns — reviewing your construction budget, identifying potential cost savings, and ensuring your project vision is financially sound. Think of us as a hands-on capital partner who happens to also fund the deal.
When you call Axios, you talk to the people who actually approve your loan — not a processor who has to "check with underwriting." Questions get answered in hours, not days. Problems get solved in real time. This matters most during construction when draw requests and change orders need fast turnarounds.
Same-day term sheets. Closings in 3-4 weeks. When a land deal or entitled lot comes up, you need a lender who can move at your speed. We've built our entire process around the reality that the best deals don't wait for slow lenders.
When your contractor finishes a milestone, the last thing you need is a 3-5 day wait for draw funds. At Axios, rehab and construction draws are released the same day they're approved. Same-day draws keep your GC paid, your subs on schedule, and your project moving. Delays in draw funding are one of the top reasons construction timelines slip — we've eliminated that problem entirely.
Most lenders only count completed real estate investment deals when determining your experience tier. At Axios, your general contracting experience qualifies you for top-tier terms. If you've been building homes as a GC for years but are making your first investment, you're not starting at Tier 1 — your construction track record puts you at the top. This means higher leverage, better rates, and fewer restrictions from day one.
We evaluate deals based on asset quality, location fundamentals, and execution strategy. Credit scores matter less than your track record and the strength of the deal. If the numbers work and you can execute, we'll find a way to get it done.
Here's a real-world example (details anonymized) of how Axios construction financing works in practice:
An experienced developer identified a 0.6-acre infill lot in a high-demand suburban corridor. Zoning was already approved for 8 attached townhomes. The developer had completed 12 prior projects and came to Axios with plans, permits, and a licensed general contractor.
The Axios Advantage: The developer completed the project 2 months ahead of schedule. Because interest was escrowed, they received a credit for the unused 2 months of interest at payoff — saving approximately $53,000. The units sold within 6 weeks of completion for a combined $6.2M, delivering a 50% return on equity in under 14 months.
Exit strategy: Sell all 8 units individually to end buyers. Two units were pre-sold during construction, further de-risking the project.
The best construction projects have a clear exit before the first shovel hits dirt. Your exit strategy determines your loan structure, timeline, and contingency planning.
Build and sell to end buyers or another investor. Ideal for single-family specs, townhome developments, and condo conversions. Fastest path to return on equity, but dependent on market timing. Pre-sales during construction significantly reduce risk.
Complete construction, then refinance into a DSCR loan or conventional mortgage based on the as-complete value or rental income. Best for multifamily builds, rental portfolios, and mixed-use properties. Axios can structure your construction loan with a refinance exit in mind, matching terms and timeline to permanent financing requirements.
Lease up the property first, then refinance based on actual net operating income (NOI). This maximizes your refinance value by proving the income stream. Takes longer but often yields the highest long-term returns, especially for multifamily and commercial projects.
Before you close, we review your exit strategy and stress-test it against current market conditions. What if rates rise? What if the sale takes 3 months longer? What if the appraisal comes in low? We model these scenarios with you — because the best time to plan your exit is before you start building.
One of the least-discussed aspects of construction financing is the dynamic between you (the borrower/developer) and your general contractor. This relationship directly impacts your draw schedule, timeline, and budget performance.
Planning a ground-up build? Contact us for our construction budget template and draw schedule checklist — the same tools our underwriting team uses to evaluate projects. It covers hard costs, soft costs, contingency allocation, and milestone-based draw structuring. Request it here →
Construction financing is a short-term loan specifically designed to fund the building of a new property from the ground up. Unlike traditional mortgages that finance existing structures, construction loans release funds in stages (called draws) as the project hits milestones like foundation, framing, and finishing. For real estate investors and developers, these loans cover land acquisition, materials, labor, permits, and soft costs.
With escrowed interest, your interest payments are built into the loan upfront instead of requiring monthly out-of-pocket payments. The interest reserve is set aside at closing, and payments are drawn from it automatically. If you complete the project ahead of schedule, any unused interest is credited back to you at payoff. This preserves your cash flow during construction when you have no rental income coming in.
LTC (Loan-to-Cost) measures your loan amount against total project costs including land, construction, permits, and soft costs. LTV (Loan-to-Value) measures the loan against the current or as-is property value. In construction lending, ARV (After-Repair Value) is also critical — it estimates the completed project value. Axios finances up to 90% LTC depending on borrower experience tier.
Traditional banks take 60-90 days to close construction financing. At Axios, we issue same-day term sheets and typically close in 3-4 weeks. Our underwriting focuses on asset quality and your execution strategy rather than mountains of paperwork, which dramatically accelerates the process.
Key requirements include: a detailed construction budget and timeline, approved plans and permits (or clear path to obtaining them), borrower experience in real estate development, the property appraisal or feasibility study, a clear exit strategy (sell, refinance, or hold), and entity documentation (most construction loans are made to LLCs). Credit score requirements vary by lender — private lenders like Axios focus more on asset quality and track record than personal credit.
A draw schedule is a pre-agreed plan that outlines when loan funds are released during construction. Instead of receiving the full loan amount at closing, funds are disbursed in stages as work is completed and inspected. Typical draw milestones include: foundation and site work (15-20%), framing and structural (20-25%), mechanical systems (15-20%), interior finishes (20-25%), and final completion (10-15%). Each draw requires inspection verification before funds are released.
Yes, but your terms will reflect your experience level. First-time builders with no construction background may qualify for lower leverage (65-75% LTC) and will need a licensed general contractor. However, at Axios, your general contracting (GC) experience counts toward your experience tier — so a builder with years of GC experience but zero investment deals can still qualify for our best terms. We actively help newer investors structure their deals and connect with experienced contractors. As you complete successful projects, you qualify for even better terms — experienced builders can access up to 90% LTC.
A bridge loan finances the acquisition of an existing property, often for renovation or repositioning, and is typically 6-18 months. A construction loan finances building a new structure from the ground up, usually 12-24 months, with funds released via a draw schedule. Some investors use a bridge-to-construction strategy: acquire land with a bridge loan, then convert to a construction loan once permits are approved.
The three main exit strategies are: (1) Sell — complete the build and sell to an end buyer, ideal for spec homes and townhouse developments; (2) Refinance — convert to a permanent DSCR or conventional loan for long-term hold, best for rental properties and multifamily; (3) Stabilize and Hold — lease up the property, then refinance into permanent financing based on NOI. The best strategy depends on the market, property type, and your investment goals. Axios helps you plan your exit before you break ground.
In 2026, private construction loan rates typically range from 9.5% to 13.5% depending on leverage, borrower experience, and project type. However, with Axios's escrowed interest structure, you don't make monthly payments — the interest is built into the loan and any unused balance is credited at payoff. This means your effective cost is often lower than the stated rate, especially if you complete the project ahead of schedule. Bank construction loans may quote lower rates (7-9%) but require 60-90 day closings, personal guarantees, and extensive documentation.
Tell us about your construction project. We'll review it and get back to you within 24 hours with a term sheet — rate, leverage, draw schedule, and structure — no commitment required.
Skip the form. Connect with a decision-maker about your construction financing today.