Construction Loans Washington DC
Up To 100% Construction Financing
Can You Get A Construction Loan In Washington DC?
In a word, yes. You can apply for a Construction Loan in Washington DC.
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.
Get Approved OnlineWhat You Need To Know About Building In Washington DC
There are plenty of reputable construction loan lenders in DC, but for your application to get approved, you need to have building plans.
- Most Construction Loans in Washington DC 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 Washington DC
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.
Learn More3. Asset Based Lending
Learn More4. Nationwide Home Loans Group
Learn More5. Lending One
Learn MoreRequirements For A Construction Loan In Washington DC
- 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 Washington DC
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 DC 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 DC 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.
District of Columbia Real Estate Market Analysis
Over the last 12 months, home prices in Washington DC have decreased by 1.5%, with an average home value of $610,180. This is 262,000 more than the average home value in the US, which is currently $347,716. The higher cost of homes in DC increases the difficulty of entering the market.
- The Median sale to list ratio is 0.990.
- The percent of sales over list price is 22.3%.
- The percent of sales under list price is 54.9%
High Profit Potential: With some of the highest average property values in the US, there is money to be made developing properties in the District of Columbia. The challenge is finding land that is suitable for construction in a desirable area. If you can identify a plot or property with potential, it’s safe to say that the post construction value will be much higher than most other states in the US.
Urban Revitalization Opportunities: The city has experienced urban revitalization efforts in various neighborhoods, creating opportunities for developers to participate in redevelopment projects and contribute to the city’s growth and renewal. When hunting for plots, you should pay close attention to poorly maintained buildings that could be greatly improved with a well-executed renovation. Simply put, there are many opportunities large-scale renovations but limited opportunities for ground up construction projects.
The DC Property Market Is Very Competitive: Washington DC’s real estate market is competitive, with numerous developers vying for opportunities. Standing out in such a market requires innovative design, strategic positioning, and effective marketing. You need to be able to see opportunities that other developers are missing, and act quickly. When you do discover a plot with potential, working with loan originator like New Silver can accelerate your ability to access capital for development.
Data Sourced From: Zillow.com
Construction Loans Near You
New Silver Offers Construction Loans Across The US
- Alabama
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- Delaware
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- Hawaii
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- Ohio
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- 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.