Hit a Speed Bump in Your Home Build? Here’s How to Get a Loan Mid-Construction
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December 31, 2023

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What happens when you’re mid-construction and you need additional funds? Or what if you want to purchase a property that’s mid-construction and cover the renovation costs?

Construction loans are a type of short-term financing designed to cover the costs of purchasing land and building a home.

In the scenarios mentioned above, you’ll need to get a loan mid-construction to cover the remaining costs.

Park Place Finance allows investors to leverage its ground-up construction loan product for mid-construction projects.

Let’s take a look at how this type of loan works, including what costs the loan covers and how to qualify for a loan mid-construction.

Get started with Park Place Finance

What is a construction loan?

Hard money construction loans cover the costs of building a property from the ground up, including:

  • Land acquisition
  • Material costs
  • Labor costs
  • Construction permits and fees
  • Architectural and engineering fees
  • Site preparation
  • Renovations on an existing property

Terms generally cover one to two years of construction, and funds are drawn on a reimbursement basis based on improvements to the project.

Can I get a loan mid-construction?

In today’s economy and housing market, there are dozens of reasons why construction projects are delayed or downright abandoned, including:

  • Supply chain disruptions that delay materials or deliveries
  • Labor shortages
  • Unexpected increases in construction costs
  • Market shifts that lead to a lack of demand
  • Unforeseen site conditions
  • Economic downturns

If you initially secured construction financing from a traditional lender, you may lack the flexibility you need to move to the next phase of your project.

Construction loans from traditional lenders are far more rigid than those from private lenders.

In addition to the strict eligibility and documentation requirements, traditional construction loans can come with limited flexibility and customization.

Traditional lenders also often do not have access to in-house capital, which can result in longer processing times and less flexibility with borrower needs.

Whether you started a project and ran into delays, or want to renovate a mid-construction project, a hard money lender with in-house capital like Park Place Finance can provide you the flexibility you need to complete your build.

What if I’m a new investor with no experience?

Park Place Finance’s ground-up construction loan product is designed for experienced home builders who are building two to 200 homes per year, but we can still help you even if you have zero new construction experience.

In the case of new investors, we require a contract with a licensed general contractor. Once you complete one or two of these, then we can help finance you without a contractor.

Reasons an investor may need a loan mid-construction

Construction projects are complex, and multiple factors can interact to influence the progress.

Let’s take a look at some common scenarios that may require a builder to get a loan mid-construction.

Unexpected costs

Construction projects can encounter unforeseen challenges or additional costs, such as unexpected repairs, changes in regulatory requirements, or delays.

Mid-construction loans provide a financial cushion to address these unforeseen circumstances without disrupting the progress of the project.

Additional cash flow

Construction projects often have staggered financing needs as different phases require varying amounts of capital.

Builders may seek mid-construction loans to manage cash flow effectively, ensuring they have funds available when needed for ongoing construction expenses.

Expedite a project timeline

Some investors may prioritize completing a construction project ahead of schedule to capitalize on market conditions, meet demand, or secure tenants.

Mid-construction loans can provide the necessary funds to expedite the construction timeline and achieve project milestones more quickly.

Market shifts or opportunities

Changes in market conditions or emerging investment opportunities may prompt builders to adjust their strategy mid-construction.

Securing additional financing allows them to adapt to evolving market trends and capitalize on new opportunities.

Investor finds a property mid-construction

An investor may find a property that is currently under construction and aligns with their investment goals. 

This property might be part of a new development, a custom-built home, or a renovation project.

The investor may anticipate increased property value upon completion, the opportunity to customize certain features, or the desire to secure the property in a competitive market and seek financing to complete the project.

What happens if my construction project gets delayed?

Construction project delays are stressful and can lead to increased costs, contractual penalties, or even legal issues.

Hard money lenders can be more accommodating on extensions as long as the payments are on time and the project is moving along.

If you run into unexpected challenges on your construction or mid-construction project, connect with us right away so we can work together on your solutions.

Park Place Finance has been in business for 17 years — we have the knowledge and experience to help you navigate any project challenge.

How to qualify for a loan mid-construction

To qualify for a loan mid-construction with Park Place Finance, you must be able to meet the following terms and requirements:

  • Minimum credit score: 700+
  • Terms: 12, 18, or 24 months
  • Type/Location: Infill construction in suburban and urban areas
  • Required experience: Must have a general contractor if less than three builds in the last 36 months
  • Loan types: Purchase and construction, refinance and construction, or construction only
  • After-repair value (ARV): ARV of up to 70%
  • Loan amounts: $100,000 to $3,000,000
  • Payment: Monthly, interest-only, no prepay penalty

Park Place Finance specializes in residential real estate and can fund various properties including single-family homes, duplexes, triplexes, quadplexes, multi-family units with five or more units, condos, and townhomes.

We can close within seven to 10 days and provide a simple, straightforward draw process with quick funding.

Before closing, we will also request a few basic items such as an REO schedule, construction budget, building plans, and permits.

Park Place Finance provides each borrower with a dedicated Account Executive who will make sure you know what’s needed to get your deal approved and funded.

Apply for a construction loan with Park Place Finance

Ready to move forward with a loan for your mid-construction project?

Get started with Park Place Finance by supplying us with some basic information about your project, and we will review it and reach out to you.

You also can give us a call at (866) 407-1599 to talk about your project now.

When you choose to work with Park Place Finance, you can rest assured that a team of real people will be dedicated to funding your deal as quickly as possible.

We look forward to helping you complete your mid-construction project as quickly and efficiently as possible!

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