Financing for Contractors: Funding Your Own Builds

A contractor funding their own project is in a different position from one building for a client. There is no owner paying you draws. You are the owner, the builder, and the borrower, and the loan has to work on all three.

It is also a position lenders like, if the file is put together properly.

Where being the GC helps

Experience is the single largest input into leverage on a build. A borrower who has run the trades on twenty jobs is a different risk from one who has hired a GC and hopes for the best. On ground-up construction we fund up to 70% LTV and 85% of cost, and where a file lands inside that range is largely a question of track record.

Doing the work yourself also compresses the schedule, and on a short-term loan schedule is money. See what a 6-month flip loan actually costs.

Where it complicates things

• Your own labor is not a fundable cost. Budgets fund materials and paid subs. Sweat equity is real value, but it does not draw.
• Self-dealing needs to be visible. If your own company is the GC on your own project, expect the budget and the GC fee to be looked at closely. Disclose it up front; it is normal, and hiding it is what causes problems.
• Draws still get inspected. Being the builder does not shortcut verification. See draw inspections.

Income documentation

Contractor income is often lumpy and heavily written down for tax. That is exactly the profile bank statement and no-doc programs exist for, and bank statement loans for investors covers how the qualifying income is calculated. On a business-purpose build the property and the plan usually matter more than the tax return anyway.

Which loan fits which job

• Spec build on land you control — ground-up construction, sized on cost. How ground-up loans work.
• Buy, renovate, resell — fix and flip, up to 90% of purchase and 100% of rehab.
• Keep it and rent it — refinance onto a DSCR loan once it is finished and leased.

Size a build in the construction loan calculator. All lending is business-purpose only, and terms are subject to underwriting.