Construction loans provide specialized financing for builders and developers undertaking ground-up construction projects throughout Anaheim and Orange County. These complex loans differ fundamentally from acquisition or refinance financing by funding projects in stages as construction progresses rather than disbursing all capital at closing. Our construction loan program accommodates both residential and commercial projects, from single-family spec homes to multi-unit developments to commercial ground-up construction. With loan amounts from $200,000 to $10,000,000, we support projects ranging from entry-level residential to substantial commercial developments.
The construction financing landscape has become increasingly challenging for developers as traditional lenders have retreated from speculative construction and imposed stricter requirements on borrower experience and pre-sales. Our construction loan program fills this gap by providing capital to qualified builders with realistic projects in strong markets like Orange County. We evaluate projects based on market fundamentals, builder capability, and project economics rather than applying rigid criteria that exclude viable developments.
Our construction loans feature structures designed for successful project completion. Interest reserves are built into most loans, meaning you don't make monthly payments during construction, interest accrues and is paid from the loan proceeds at project completion. Draw schedules align with construction milestones, ensuring capital is available when needed for materials, labor, and contractor payments. Terms from 12 to 24 months accommodate typical construction timelines plus marketing periods for completed units. Interest rates from 11.99% to 14.99% reflect the higher risk and administrative complexity of construction lending.
Anaheim and Orange County present attractive opportunities for new construction. Limited housing supply, strong employment growth, and high barriers to entry for new development create favorable market conditions for well-conceived projects. The cit' ongoing redevelopment efforts, including the Platinum Triangle transformation and various mixed-use projects, demonstrate local government support for thoughtful development. Our construction loans help experienced builders capitalize on these opportunities by providing the capital and support needed to bring new properties to market.
Service applications
Construction loans serve various development strategies and project types throughout the Anaheim and Orange County markets. Single-family spec home construction represents a common application, where builders acquire lots or tear-down properties and construct new homes for sale to owner-occupants. Our loans finance both the land acquisition and construction costs, with interest reserves that eliminate payment obligations during the building period. For experienced builders with proven track records, we offer high leverage that maximizes return on equity while maintaining appropriate risk management.
Small subdivision development benefits from construction financing structured for multiple lots or phases. Rather than financing each home individually, we can structure loans that cover land acquisition, infrastructure installation, and construction across multiple units. These loans typically include release provisions that allow individual homes to be sold and their portion of the loan paid off while construction continues on remaining units. This structure maximizes capital efficiency by recycling proceeds into ongoing construction rather than requiring full loan repayment before any sales occur.
Multi-family ground-up construction has emerged as an attractive development category in Orange Count' tight housing market. Duplexes, fourplexes, and small apartment buildings provide workforce housing in high-demand areas while generating strong returns for developers. Our construction loans accommodate these projects with structures that recognize the different economics of rental property development, loan terms may include periods for lease-up after construction completion, and interest reserves cover the pre-stabilization period before rental income begins.
Commercial ground-up construction serves developers targeting retail, office, industrial, or mixed-use projects. These loans require more complex underwriting including pre-leasing requirements for certain property types, tenant improvement allowances, and longer lease-up periods. Our commercial construction program works with experienced developers who understand their target markets and have relationships with potential tenants. We structure these loans with appropriate reserves, extended terms when needed, and conversion options to permanent financing upon stabilization.
ADU (Accessory Dwelling Unit) construction financing supports the growing market for backyard cottages, garage conversions, and junior ADUs. Californi' liberalized ADU laws have created substantial demand for these units, which provide rental income for homeowners and address housing shortages. Our construction loans finance both ground-up ADU projects and conversions of existing structures, with streamlined processes that recognize the smaller scale and shorter timelines of typical ADU construction.
Land acquisition with future construction planning allows developers to secure entitled land before beginning immediate development. These loans recognize that quality development land in Orange County is scarce and must be acquired when available, even if construction won't begin for several months. We structure these loans with extended timelines or conversion features that accommodate the planning and permitting period before groundbreaking. For properties requiring entitlement work or permit approval, we can structure loans that fund these pre-development costs as well.
Common challenges
Construction projects present distinct challenges that require careful planning and risk management. Cost overruns represent the most significant risk, occurring when material costs increase, unforeseen site conditions emerge, or project scope expands beyond initial budgets. We recommend comprehensive budgeting with 10-15% contingencies, fixed-price contracts with qualified contractors, and regular draw monitoring to identify potential overruns early. Our experience with Orange County construction costs helps us identify realistic budgets and flag potential problem areas during underwriting.
Permitting and regulatory delays frequently extend construction timelines beyond initial projections. Anaheim and Orange County have complex building codes, environmental regulations, and community review processes that can add weeks or months to projects. Experienced builders factor these timelines into their plans and maintain relationships with permit expediters when needed. Our construction loans include buffer time beyond typical construction schedules, and we work with borrowers when delays occur to adjust draw schedules and loan terms appropriately.
Our approach
Our construction lending approach combines rigorous project analysis with builder-friendly loan administration that supports successful project completion. We understand that construction loans require ongoing involvement rather than passive financing, and we structure our processes accordingly.
When you submit a construction loan request, our underwriting team conducts comprehensive analysis of the project feasibility, market demand, and your capability as a builder. We review architectural plans, construction budgets, contractor bids, and schedules for reasonableness and completeness. We analyze comparable sales or rents to verify project economics and evaluate your track record with similar projects. This thorough review protects both parties by ensuring loans are made for viable projects with realistic projections.
Our draw administration process provides the liquidity management essential for construction success. We establish draw schedules aligned with construction milestones, with each draw request supported by inspections, contractor affidavits, and lien waivers. Draw requests are processed within 24-48 hours of complete submission, ensuring your contractors and suppliers get paid promptly to maintain project momentum. For experienced builders with established track records, we offer streamlined draw processes with reduced documentation requirements.
Throughout the construction period, we maintain regular communication to monitor progress and address any issues that arise. Our goal is supporting your project success, which means providing responsive service when you need draw modifications, timeline adjustments, or other accommodations. We view ourselves as your construction financing partner, not simply a capital source.
Service areas
Anahei' development environment offers opportunities for builders who understand local market dynamics and regulatory requirements. The cit' General Plan identifies areas designated for higher-density residential development, including the Platinum Triangle and areas near transit stations. The Anaheim Resort District continues to evolve with new hospitality and entertainment-related development. And established neighborhoods present tear-down opportunities for luxury new construction. Builders who work effectively with city planning staff and understand community priorities can move projects through the entitlement process efficiently.
Orange Count' housing market fundamentals strongly support new construction. The county consistently produces fewer housing units than population growth requires, creating persistent demand for quality new homes. Median home prices well above replacement costs provide margin for new construction even with high land and construction costs. And the regio' employment growth, particularly in high-wage sectors, generates demand across price points. Our construction loans help qualified builders participate in this market by providing the capital needed to bring new housing supply to a market that desperately needs it.
Frequently asked questions
How are construction loan funds disbursed during the project?
Construction funds are disbursed through a draw system tied to project milestones. Before construction begins, we establish a draw schedule aligned with major construction phases, typically 4-8 draws for residential projects and more for commercial developments. To request a draw, you submit a draw request form with supporting documentation including invoices from contractors and suppliers, photos showing completed work, and lien waivers from paid parties. We review submissions within 24-48 hours and may conduct inspections to verify work completion and quality. Once approved, funds are wired directly to your account or, in some cases, to contractors for direct payment. This milestone-based system ensures funds are available when needed for construction progress while protecting both you and us by verifying work completion before releasing capital.
What experience do I need to qualify for a construction loan?
Construction loan qualification depends significantly on your track record as a builder. For experienced builders with 3+ successfully completed similar projects in the past 3 years, we offer our best terms including higher leverage, lower rates, and streamlined processing. These borrowers have demonstrated their ability to complete projects on time and budget, reducing our risk. For builders with limited experience, we may require higher equity contributions (reducing loan-to-cost ratios), completion of construction management education, working with approved general contractors, or partnering with experienced builders. We evaluate each applicant individually, if you're new to construction but have relevant experience in real estate development, project management, or related fields, we can structure appropriate financing. We also offer builder mentorship programs that pair less experienced borrowers with industry veterans.
Do I make payments during the construction period?
Most of our construction loans include interest reserves that cover payments during the construction period. When the loan closes, we calculate estimated interest costs for the construction term and include this amount in the loan proceeds. As interest accrues monthly, it's paid from this reserve rather than requiring you to make out-of-pocket payments. This structure preserves your cash flow for construction costs and eliminates payment burden during the pre-revenue phase. At project completion, any unused interest reserve is applied to reduce your loan balance or returned to you depending on loan structure. For borrowers who prefer to make payments during construction, we can structure loans without interest reserves, typically at slightly better rates since the loan balance decreases over time.
Can you finance both the land purchase and construction costs?
Yes, we provide combined financing that covers both land acquisition and construction costs in a single loan. This structure, often called a "one-time close" or "construction-to-permanent" loan, eliminates the need to refinance between land acquisition and construction phases. For raw land purchases, we typically require the land to be entitled for the intended use and may include a construction commencement requirement within a specified timeframe. For tear-down scenarios or developed lots, we can structure loans that fund land acquisition at closing with construction funds held in escrow for draws as work progresses. Combined financing simplifies administration, reduces closing costs versus separate loans, and ensures construction funding is committed when you acquire the land. We typically lend up to 75-80% of total project cost (land plus construction) for experienced builders.
What happens if construction takes longer than expected?
If construction extends beyond the initial loan term, we offer several extension options. Most commonly, we can extend the loan for additional 3-6 month periods for a modest extension fee (typically 0.5-1% of the loan balance). Extensions require updated project information and demonstration that the project remains viable. If delays result from circumstances beyond your control, permit delays, weather, material shortages, we work with you to adjust timelines without excessive penalty. However, if delays result from poor project management or financial issues, we may require additional equity contributions or other protective measures. We recommend building realistic timelines with buffer periods into initial loan terms and maintaining open communication throughout construction so we can anticipate and address timing issues before they become problems.