Infill/ New Construction
Infill/new construction loans are specialized types of real estate financing used for building homes or properties—either on vacant urban lots (infill) or on undeveloped land (new construction).
What Are Infill Construction Loans?
Infill construction loans are used to finance the building of a new home on an empty lot within an already developed area (like a city or established neighborhood).
Common scenarios:
- Replacing a demolished home with a new one
- Building on an undeveloped lot in a city
- Urban redevelopment or revitalization projects
What Are New Construction Loans?
New construction loans fund the building of a home from the ground up, often on raw or previously unused land.
Common scenarios:
- Buying land and building a custom home
- Developer building several homes in a new neighborhood
- Owner-builders or construction contractors building on their own property
How These Loans Work
- Typically short-term (6–18 months)
- Funds are released in stages (draws) as construction progresses
- Borrower pays interest only on disbursed amounts during construction
- Upon completion, the loan is either; Converted to a permanent mortgage, or Paid off with a separate long-term loan (aka construction-to-perm loan).
Requirements
- Detailed construction plans and cost estimates
- A qualified builder or contractor
- Down payment (often 10–30%)
- Good credit score and reserves
- Appraisal based on projected value after construction