Construction Financing
Funding for Ground-Up Developments and
Major Renovations
Construction financing is one of the most complex debt structures in commercial real estate. Unlike stabilized asset lending, construction loans require lenders to underwrite a project that does not yet exist, funding capital in staged draws as work progresses toward a defined completion and stabilization milestone.
The right construction loan is sized around total project cost, the development timeline, and the sponsor’s plan for permanent takeout or disposition at stabilization. Getting that structure right from the start reduces cost overruns, draw delays, and refinancing risk at completion.
Key Highlights
Loan Size: $5 million to $50+ million
Loan-to-Cost (LTC): Up to 80%
Loan-to-Value (LTV): Typically 70%–75%
Terms: 12–36 months (construction period)
Structure: Interest-only payments during construction, flexible draw schedules
Recourse: Non-recourse and recourse options available
Property Types We Finance
Multifamily (new developments or major rehab projects)
Mixed-use (residential and commercial components)
Office (ground-up or full building renovations)
Retail (new centers or anchor tenant redevelopment)
Industrial (warehouses, distribution centers, or specialized facilities)
Hospitality (hotels, resorts, and service-oriented properties)
When to Use a Construction Loan
Funding ground-up development or major renovations
Financing complex, large-scale projects
Securing capital for multi-phase developments
Seeking liquidity to manage construction-related expenses
Preparing for future permanent financing or refinancing
How Lenders Evaluate Construction Loan Requests
Construction loan underwriting is more rigorous than most other commercial real estate debt because lenders are funding a project that has not yet been built. The underwriting process evaluates the total project budget, the credibility of the cost estimates, the experience of the general contractor, and whether the development timeline is realistic given current market conditions and construction costs.
Sponsor experience carries more weight in construction lending than in almost any other product. Lenders want evidence that the developer has successfully completed similar projects on time and within budget. A first-time developer pursuing ground-up construction faces a significantly higher bar than an experienced sponsor with a track record in the same asset class and market. In many cases, lender appetite for a project depends as much on who is building it as on what is being built.
The permanent takeout is evaluated as carefully as the construction itself. Lenders assess whether the projected stabilized value and income will support permanent financing at loan maturity, whether the exit assumptions are realistic given current market conditions, and whether the sponsor has a credible path to a permanent loan or disposition. Projects where the permanent takeout depends on aggressive rent growth or significant cap rate compression are underwritten more conservatively and may require additional equity or recourse.
Our Approach
We understand that construction projects are time-sensitive and require flexibility. That is why we offer financing solutions that align with your project’s timeline and cash flow needs. We work closely with developers to craft financing that supports each phase, from pre-construction to stabilization, positioning the project for a successful exit.
Sample Use Cases
Ground-up multifamily development with a projected lease-up period
Large-scale office park development with phased construction
Renovation of a historic hotel, readying it for repositioning
Industrial building with modernized facilities and tenant improvements
Mixed-use complex with retail, office, and residential components
Why Choose i95 Capital?
Deep understanding of construction timelines, costs, and risk factors
Customized draw schedules to match project milestones
Ability to finance additional phases with one loan agreement
Flexible capital stack options, including mezzanine and preferred equity
Ready to Start Your Next Project?
Secure the capital needed to build or renovate with confidence. i95 Capital structures construction loans tailored to the development’s timeline and requirements.
