New Construction Loans in Colorado

Frequently Asked Questions

What are the requirements for getting a construction loan?

Construction loan approval typically requires you to submit architectural plans, permit documentation, a line-item budget, and a signed agreement with a licensed builder. Most lenders ask for 15% to 20% down and a credit score of 660 or higher. You should either own the land or have it under contract. We also evaluate the builder’s track record, borrower liquidity, and the project’s estimated value. Draws are released at set milestones throughout construction. Preparing a clean, detailed package helps speed up approval. Our team works closely with you to structure the loan based on project scope and experience.

How do home construction loans differ from traditional financing options?

Home construction loans are structured as short-term, interest-only financing that’s disbursed in phases. Traditional mortgages, by contrast, offer lump-sum funding and require full repayment immediately. With a construction loan, you’ll receive funds in draws based on completion milestones—such as framing or inspections. This keeps payments low during the build while allowing you to manage cash flow efficiently. Lenders evaluate project viability, contractor experience, and exit strategy instead of W-2 income or debt ratios. These loans are ideal for custom homes, short-term rentals, or real estate investments that require staged capital deployment.

What credit score is needed to qualify for new construction financing?

For most construction financing programs, a credit score of 660 is the benchmark, though exceptions are possible with strong compensating factors. These include builder experience, liquid reserves, or high projected property value. While better scores may lead to lower interest rates, borrowers with mid-600s can often qualify if the project and budget are solid. Lenders will also assess your draw schedule, timeline, and exit strategy. These loans are built for real estate development, so traditional W-2s or tax returns matter less than the strength of your plan. A well-prepared application improves both speed and terms.

Are construction loans available to small business owners or just individuals?

Construction loans are available to both individual borrowers and small business owners. Whether you’re building under an LLC, corporation, or as a sole proprietor, we can help you secure funding. A personal guarantor—typically someone with 20%+ ownership—is required for entity loans. This flexibility makes it easier for business owners to access capital without full tax documentation. We often work with investors, builders, and self-employed borrowers whose income sources don’t fit into traditional mortgage boxes. Our focus is on project strength, builder experience, and exit plan—not rigid W-2 requirements. Business borrowers are welcome.

What is the typical loan rate for construction financing?

Construction loan rates generally begin at 5.50%, though actual pricing depends on the borrower’s credit score, loan size, and project risk. During the construction phase, payments are interest-only, which helps reduce early costs. Once construction is complete, borrowers usually refinance into a long-term mortgage or DSCR loan. Higher-risk builds or less experienced teams may see modestly higher rates. Our loan programs are designed to be flexible and investor-friendly. We also offer longer amortization options post-completion. By evaluating builder experience and deal structure, we keep rates competitive while moving your project forward.

What types of loans are best for new construction projects in Colorado?

The best loans for new construction projects in Colorado are draw-based programs with short-term, interest-only structures. These loans allow you to fund land and vertical build costs in stages, reducing financial pressure during construction. Colorado investors use them for short-term rentals in mountain towns, single-family homes in suburbs, or infill units in cities like Denver or Boulder. We cover up to 85% of land purchase and 100% of build costs. After completion, many refinance into DSCR loans or long-term mortgages. This approach supports phased development and flexible project timelines across the Colorado market.

Explore new construction loans and other Airbnb loans in neighboring states like Maryland and Pennsylvania to strengthen your investments beyond Delaware.