Construction Loans New York
Up To 100% Construction Financing
Can You Get A Construction Loan In New York?
In a word, yes. You can apply for a Construction Loan in New York.
However, for your application to be successful, you need to have detailed knowledge of the land that you are hoping to purchase and build on.
More specifically, you need an exact location, together with plans for development.
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What You Need To Know About Building In New York
There are plenty of reputable construction loan lenders in New York, but for your application to get approved, you need to have building plans.
- Most Construction Loans in New York offer interest only payments.
- Importantly, you are required to pay back 100% of the loan amount, when the loan terms end.
To pay back the loan in full, you need to have a clearly defined exit strategy. Either you need to sell the development for a healthy profit, or you need to refinance the property based on the revised value of the building once it is completed.
In addition, there other important factors that a lender will consider when assessing a loan application, including:
FICO Score: Typically, there will be a minimum FICO score that the borrower needs to meet in order for the loan to be granted. At the current moment in time, the minimum FICO is 650.
Cost of Project: A reputable lender should be willing to cover a substantial portion of the project cost. This ratio is called Loan To Cost, and it is a quick way to assess how much capital you can access to complete the building project. At this moment in time, New Silver offers up to 90% Loan To Cost (LTC).
Best Construction Loan Lenders In New York
1. New Silver
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- Interest rates 10 – 12.75%
- Instant proof of funds letter
- Credit score 650+
- Interest only payments
2. Lima One
Lima One Capital is a private lender offering investment property loans for various investing strategies. Borrowers can work together on their deals with the in-house team of experts at Lima One, which speeds up the hard money lending process and cuts out any middlemen.
Lima One offers new construction loans for builders who are ready to begin a ground-up project, or a tear-down. Up to 85% LTC is offered, along with 70% LTV. Loans begin at $100,000 and the maximum amount that can be borrowed is $3 million. Lima One also has a Build to Rent loan product which offers longer loan terms.
3. Asset Based Lending
ABL (Asset Based Lending) is one of the prominent construction loan lenders focused on helping small business owners, real estate investors, and commercial contractors finance their business activities. These loans are tailored to each person’s needs and ABL provides hard money construction loans in over 29 states across the US.
ABL’s new construction loans are used for land acquisition and construction or rebuilding of existing property. Previous experience is an essential element when applying for these loans. New construction loans can be used for single family, multi-family, and mixed-use properties.
4. Nationwide Home Loans Group
Nationwide home loans group, another top contender in the list of best construction loan lenders, offers both one-time and two-time close construction loans. The lender has made it to the top of the list based on their loan offerings and they offer up to 100% financing of the construction. Nationwide Home Loans Group provides funding for primary residences, second homes, ADUs and 1-4 unit multi-family properties.
The lender facilitates all parts of the process, from searching for a property to communicating with builders. Nationwide Home Loans Group provide fixed-rate and interest-only terms on their construction loans. The one-time close construction loan requires only one appraisal and no-requalification once the construction is complete.
5. Lending One
LendingOne is a direct lender for real estate investors, with loans that are tailored to each investor’s strategy and is one of the top ranked Construction Loan Lenders in 2023. Lending One offers ground up construction loans which are between 12 and 24 months.
These require interest-only payments for a period of time and are applicable for single-family detached properties, condos, town homes, multi-family properties
Requirements For A Construction Loan In New York
- Interest Rate: The interest rate for this financing option falls in the range of 10 to 13.25%.
- Origination Fee: An origination fee is applicable, starting from 1.375% of the loan amount.
- Loan To Cost (LTC): You can secure a loan for up to 90% of the total project cost.
- Construction Financing: This option offers financing of up to 100% of your construction expenses.
- Loan To ARV: You can borrow up to 75% of the property’s estimated value after repairs (ARV).
- Term: The loan term for this option is set at 24 months.
- Minimum Loan Amount: The minimum loan amount you can request is $100,000.
- Maximum Loan Amount: The maximum loan amount available is $5,000,000.
- Minimum FICO: To qualify, you must have a minimum FICO credit score of 650.
- Type of Property: This financing is suitable for various property types, including residential properties with 1-4 units, condos, and townhomes.
How To Complete A Building Project In New York
Step 1 – Identify A Piece Of Land That Can Deliver A Positive ROI
First and foremost, you need to identify a piece of land in New York that is suitable for ground up construction.
To ensure that the building project will be profitable, you need to be able to accurately estimate how much the building will be worth once the project is completed.
Step 2 – Complete Building Plans & Apply For Building Permit
For your construction loan to be approved, most lenders will require building plans to be submitted during the application. In addition to building plans, you will also need to submit a building permit. Without an official permit, the loan application cannot proceed to closing. This is a key item to attend to.
Step 3 – Select A Construction Loan Lender
After finding the land and sorting out the plans and the permits, the next task is to select a Construction loan lender that can meet your needs as a developer.
If you are a residential developer looking for a simple online approval process together with lightning-fast closing, New Silver Lending could be the right fit.
With that being said, there are numerous lenders to choose from. This article highlights the best Construction loan lenders.
Step 4 – Apply For Your New York Construction Loan
The final step is to apply for the loan. If you have followed all the steps outlined above and you meet the minimum credit score requirements, there is a strong likelihood your loan will be approved.
New York Real Estate Market Analysis
Over the last 12 months, home prices in New York have increased by 3.4%, with an average home value of $453,887. This is $104,000 more than the average home value in the US, which is currently $349,770.
The Median sale to list ratio is 1.008. A sale to list ratio above 1 generally means that it’s a seller’s market and it could be a good time to maximize returns if you are a NY homeowner.
- The percent of sales over list price is 55.3%
- The percent of sales under list price is 34.6%
Extremely High Demand For Property: New York is a global economic and cultural hub, attracting a constant influx of people. This results in high demand for housing, both for ownership and rentals.
Very Strong Rental Market: New York City has a significant rental market, with a large portion of residents opting to rent rather than buy due to high property prices. Despite this tendency of NY residents, the appetite for newly developed and newly renovated homes is still high. Provided you focus on high ROI developments or renovations, the market should
Residential Sales Have Slowed In 2023: In 2022, there were 217,852 residential sales. As of November 2023, there have only been 116,430 residential sales in New York. The drop in sales has been partially caused by increased interest rates in the US and lower sales activity will more than likely continue in 2024. In addition, the cost of living in New York increases the financial difficulty of becoming a homeowner in NY.
Finding Space For New Construction Is A Challenge: This is particularly true in New York city, which is one of the most developed areas in the United States and globally. In order to find locations that are suitable for ground up construction, you will more than likely have to identify plots that are outside of NYC.
If you’re heart is set on the city, you will need to focus on finding properties that are poorly maintained and in desperate need of rehab. This strategy is similar to flipping houses, and it can work very well for experienced property developers.
Data Sourced From – Zillow.com
Construction Loans Near You
New Silver Offers Construction Loans Across The US
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- Delaware
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- Rhode Island
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- Washington
- Washington DC
- West Virginia
- Wisconsin
- Wyoming
Additional Resources
Construction Loan Calculator
Use our Construction Loan Calculator to estimate your monthly payments. Enter the loan amount, interest rate, and the term of the loan to calculate your monthly payment.
Construction Loan Rates
Find out the latest Construction Loan Rates here. This guide explores what rate you are likely to qualify for.
Construction Loan Requirements
First and foremost, you need to know the location of the development and you also need to have building plans and permits.
Construction Loan Down Payment
The typical down payment on a construction loan is between 10% and 20% of the total project cost.
Best Construction Loan Lenders
Some lenders are better than others. This guide reveals the Best Construction Lenders at this moment in time.
How To Get Into Construction
This guide explains out how you can get started in the Construction Industry.
How Much Does Construction Pay
On average construction workers make over $50,000 annualy.This resource explores how much construction pays, on average.
How To Start A Construction Business
This is a step-by-step guide which explains how to start a Construction Business.
Types Of Construction Loans
There are 3 main types of Construction Loan. This guide highlights the differences between them.
Banks That Offer Construction Loans
There are various US banks providing different Construction Loan options for real estate investors.
Construction Loan vs Mortgage
There are a number of differences between a Construction Loan and Mortgage. Each difference is fully explored in this guide.