Construction Loan Types for Foreign Investors
Construction loans are designed for building a new structure on an already owned lot. Construction loans can be designed as long term financing converting to a 30 year loan or short term financing designed to be refinanced or sold. Typically, funds for construction are paid by the lender on a draw schedule, after completed inspections.
One-Time Close Construction Loans
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Single loan covering construction & permanent financing
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30-50% down payment
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Interest rates: 7-10%
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12-24 month construction period
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Converts to permanent mortgage after completion
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Saves on Closing Costs
Two-Time Close Construction Loans
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Two loans one after another
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More flexibility in financing and loan terms
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Requires refinancing after construction
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Higher closing costs because two loans
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Rates: 8-10%
Renovation Construction Loans
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Covers property purchase and renovation
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Loan based on after-renovation value
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65-75% LTV
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Renovation costs are financed
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Rates: 9-12%
Mid-Construction Refinancing
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Refinancing during active construction
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Helps manage cash flow
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Requires substantial project completion
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Detailed progress documentation
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Rates: 7-10%
Foreign Investor Requirements
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700+ international credit score
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Detailed project plan
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Proof of international income
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Licensed contractor required
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Comprehensive property appraisal
Key Documentation
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International passport
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Architectural plans
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Contractor credentials & licenses
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Detailed construction budget
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Translated financial statements
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Permit approval
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Entity Documentation
Key Insights
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Land must be owned already
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Land can be used as partial collateral
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Contractor cannot be family
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Permits must be approved by county already
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Construction is the biggest return on investment in real estate
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Building Spec Houses should include the contractor in ownership
Banks
