$765K ground-up build in Worcester, MA — 85% LTC, 14-day close

Situation

A custom-home builder bought a wooded lot outside Worcester to build a high-spec single-family home for sale, supported by recent new-construction sales nearby.

Structure

The loan funded 85% of the $900,000 total cost at 9.00% with two points on a 24-month term, inside the 75% cap on the $1.25M as-complete value. Plans, specifications and the permit path were in at application; the close took 14 days.

In numbers: a $765,000 loan against $900,000 of total cost left $135,000 of borrower equity in the deal. The value test — 75% of the $1,250,000 as-complete value ($937,500) — sat above the loan, so cost, not value, set the size. Fully drawn, interest-only carry at 9.00% works out to about $5,738 a month, and 2 points of origination came to $15,300 at closing.

Draws

Foundation, framing, rough-in and final draws were released on photos and invoices, with finish-level specifications part of the approved budget.

The file

What was in the file: the land documents, the plans and specifications, the itemised hard- and soft-cost budget and build schedule, the as-complete value estimate with comparable new-construction sales, the GC agreement with license and insurance, builder’s risk insurance, and bank statements showing the cash to close and six months of reserves. The appraisal valued the home as complete against recent new-construction sales nearby. Every checklist item came back inside 48 hours, which kept the close at the fast end of the range. Title was opened on the day of application and insurance was bound before the appraisal came back. The term sheet set the final leverage and pricing against the published maximums.

Exit

The home sold at completion, retiring the loan inside the term.

• Specifications and comps supported the value
• Builder with a custom-home record
• Phased draws matched the build
• 24 months covered build and sale

Ground-up construction program terms →

Ground-up construction loans in Massachusetts →