How to obtain a construction loan in California

13 Replies

I have been informed by my present loan officer that the major banks do not offer construction loans anymore. Has anyone here obtained a construction loan lately? We are looking to tear down a 5-plex and rebuild two spec home on it.



I'm not in CA, but in TX the local and regional banks lend on new construction. 

Hi @Mark Hu  ,

I have done some research and I know few of the developer near Arcadia/Pasadena they use [REMOVED]. You can look into some chinese bank that they have some loans that normal banks don't offer!

Originally posted by @Robert Chuang:

Hi @Mark Hu  ,

I have done some research and I know few of the developer near Arcadia/Pasadena they use [REMOVED]. You can look into some chinese bank that they have some loans that normal banks don't offer!

 Interesting. I think Minh L has mentioned [REMOVED] as doing more favorable loans than US banks. What different loans have you seen from Chinese Banks in the US?  New construction?

@Mark Hu Finding lenders for new construction, spec houses, is very difficult, but it can be done. the question is, what is the LTV of the deal, your experience, are you a contractor or ? We are developers building spec construction, but use hard money loans for our construction.

@Mark Hu  I have spoken to a few investors that have been able to get bank construction loans. I am down in San Diego. I know one of the banks was the [REMOVED]. Can't remember the other. I am a hard money lender, we offer construction loans and I come across the vast majority of clients that can't find the banks willing to do it... but apparently it can be done!

Im a former contractor from Ca and now reside in Dallas Texas. I was living in Riverside county back in 2007 and loans were easy to get construction type. I built many homes in that area and the last one I built in 09 was it. Most of the construction type loans became very hard to get. In moving to Texas Ive found a lot of loans options. I used a lady named [REMOVED] if you need a loan she is a great person to talk to.

Welcome to BiggerPockets, Scott Craven. 

This post has been removed.

I would call all smaller local banks with just a few branches.  Find out who is building spec and look up who they use to finance projects.  One of my best banks I do business with now, came from a cold call.  I saw them pop up on the register of deeds financing another small developer who was building specs.  Decided to call them, and now he has financed a ton of projects for me and been a great resource!

Nothing wrong with Normandy-- I know of a few guys in Charlotte using them-- but my understanding is they are closer to hard money rates. 

Here's the deal: 

If you're a big player and are prepared to have your financial statements in order, develop relationships with regional banks. I can think of at least a dozen in a Orange County alone. 

As already suggested, several Asian banks are competing aggressively for loans.

I'd list them here but they'd get redacted by [moderator].

If all you need is money to complete rehab projects, go with the hard money guys. It's hard to miss them as their owners or reps will talk at virtually every REIA perhaps several times a year. Yes, you'll pay a little more, but they're much easier to work with. It's their niche.

Hi, @Jon Klaus  

I have seen multiple new construction loan for the developers in Arcadia/Pasadena. I also know that east west offers loan up to 50% of your equity (property) without further information.

Spec construction loans are still mainly missing even from retail banks. 

As most said above, it's mainly going to be obtained from private/hard money lenders.  I'm a hard money broker and while dependent from deal to deal, we handle construction loans.  Tear down/rebuilds and major rehab fix/flips.

My .02


I work with lenders in CA that can offer spec or owner occ construction financing but only on the project itself not the land. You will have to purchase the land with cash or private/hard/seller financing/etc then apply for the construction financing (down payment on the project will be from 25-35% down depending on your deal specifics).

Once the improvement is finished you could obtain take out financing into more permanent terms. The permanent financing taken after depending on the finished value could payoff the liens against the land for acquisition and construction. One thing is that the construction lender tends to want first position against the land and if you're using private/hard money to finance the land it might conflict.

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