Mound City Lending

Ground-Up Construction Loans

Comprehensive financing for new construction projects from foundation to completion. Our construction loans provide the capital you need to build single-family homes, townhomes, or small multifamily properties with structured draw schedules and competitive terms.

Loan Features

Up to 85% LTC

Finance up to 85% of total construction costs including land acquisition, permits, materials, and labor. Competitive leverage for experienced builders.

18-Month Terms

Standard 18-month construction period with optional extensions. Adequate time for permitting, construction, and final inspections.

Structured Draws

Milestone-based draw schedule tied to construction progress. Funds released after third-party inspection confirms completion of each phase.

Loan Terms & Rates

Standard Terms
Loan Amount:$200,000 - $5,000,000
Loan-to-Cost (LTC):Up to 85%
Loan-to-Value (LTV):Up to 70% ARV
Interest Rate:10.5% - 14.5%
Term Length:18 months
Extension Options:Up to 6 months
Fees & Costs
Origination Fee:3.0% - 4.5%
Processing Fee:$1,000
Appraisal Fee:$600 - $1,000
Inspection Fee:$200 per draw
Extension Fee:1.5% of loan amount
Prepayment Penalty:None after 12 months

Draw Schedule

Construction loans are disbursed in stages based on project milestones. Typical draw schedule includes:

Draw 1: Foundation (15%)

Foundation complete, passed inspection

Draw 2: Framing (25%)

Framing, roof, windows installed

Draw 3: Mechanicals (25%)

Plumbing, electrical, HVAC rough-in

Draw 4: Drywall (15%)

Drywall, insulation complete

Draw 5: Final (20%)

Certificate of occupancy issued

Note: Draw percentages may vary based on project specifics. All draws require third-party inspection and lender approval.

Qualification Requirements

Borrower Requirements
  • Must operate through a business entity (LLC, Corporation, Partnership)
  • Minimum credit score of 680 (construction loans require higher creditworthiness)
  • Proof of funds for down payment (15-30% of total project cost)
  • Pass borrower competency assessment (75% minimum score)
  • Demonstrated construction or development experience strongly preferred
  • Financial strength to cover cost overruns and delays
Project Requirements
  • Single-family homes, townhomes, or small multifamily (up to 4 units)
  • Approved building plans and permits in place or ready to obtain
  • Detailed construction budget with line-item breakdown
  • Realistic construction timeline (typically 12-15 months)
  • Licensed general contractor with proven track record
  • Builder's risk insurance and liability coverage
Documentation Requirements
  • Architectural plans and specifications stamped by licensed architect
  • Building permits and zoning approvals
  • Executed construction contract with licensed general contractor
  • Contractor license, insurance certificates, and references
  • Appraisal showing as-completed value (ARV)
  • Clear exit strategy (sale, refinance, or long-term rental)

Example Scenario

Typical New Construction Project

Project Details

Land Cost:$150,000
Construction Cost:$350,000
Soft Costs (permits, etc):$50,000
Total Project Cost:$550,000
Property Type:Single-Family
Square Footage:2,500 SF
As-Completed Value:$725,000
Timeline:14 months

Loan Structure

Loan Amount (80% LTC):$440,000
Borrower Equity (20%):$110,000
LTV (based on ARV):60.7%
Interest Rate:12.0%
Loan Term:18 months
Monthly Interest Payment:$4,400

Profit Analysis (14-month project)

Sale Price:$725,000
Loan Payoff:-$440,000
Interest Paid (14 months):-$61,600
Closing Costs (6%):-$43,500
Holding Costs:-$8,400
Initial Equity Investment:-$110,000
Net Profit:$61,500
Return on Investment (ROI):56% (14 months)
Profit Margin:11.2%

Important: Construction projects carry higher risk than renovations. Budget for 10-15% contingency for unexpected costs. Weather delays, permit issues, and material price fluctuations can impact timeline and profitability. Work with experienced contractors and maintain adequate reserves.

Build Your Vision from the Ground Up

Finance your next ground-up construction project with flexible terms and experienced support. Get pre-approved today.