It may come as a surprise that many lenders will not lend on a property that is land value only or simply a vacant building lot. 

There are also far fewer lenders currently who are providing construction financing.  Shopping between the lenders that do offer it, is critical for pricing.

These are general guidelines for construction financing: 

• a floating rate of prime + 1% - 2 % during construction  
• mortgage amount will be based on completed value - so plans and budget must be in place at time of application  
• min 1% fee to the lender
• 3 draws: 1st at land purchase, 2nd at lock-up and 3rd at occupancy permit
• each draw will require an inspection and a title search
• the lender will always hold back enough funds to complete the project
• clients will always have to pay for costs first and then get reimbursed by the lender  

When clients are looking for more flexible options, then private financing may be a great alternative to consider.  It can be customized to your clients' needs.