Construction Loan Down Payment Requirements Explained

Down payment requirements for construction loans differ from conventional mortgages — and they differ significantly between bank programs and private lenders. If you're planning a ground-up build and trying to figure out how much capital to bring to the table, the answer depends on your lender, your experience, your project, and how you structure the deal.

The short version: private lenders typically require 10–20% of total project costs, while banks often require 20–25% or more.

Understanding Loan-to-Cost (LTC): The Key Metric in Construction Lending

In construction lending, the relevant metric isn't LTV (loan-to-value) — it's LTC, or loan-to-cost. LTC measures the loan amount as a percentage of the total project cost, which includes land acquisition, hard construction costs, soft costs, and financing fees.

Example: Total project cost: $500,000. Lendoor loan at 90% LTC: $450,000. Your required equity: $50,000.

At Lendoor, we offer up to 90% LTC on ground-up construction projects.

Typical Down Payment Ranges by Lender Type

Private / Hard Money Lenders: LTC range 80–90%, required equity 10–20%, asset-based underwriting. Community Banks: LTC range 70–80%, required equity 20–30%, income-based underwriting.

Factors That Affect Your Required Down Payment

Experience Level: Investors with completed projects get better leverage.
Credit Profile: Best pricing at 680+ credit score.
Project Type: Single-family spec homes in established markets get higher LTC.
The Market: Supply-constrained markets with strong comps get better terms.
Exit Strategy: A presale contract can unlock higher LTC.

LTC vs. LTV in Construction Lending

LTC (Loan-to-Cost): Loan as a percentage of what you're spending to build — the primary leverage metric. LTV (Loan-to-Value): Loan as a percentage of the completed property's projected value. Lenders use both — your loan amount is limited by whichever produces the lower number.

How to Minimize Your Down Payment

Land equity as contribution. Owned lots can substitute for cash down payment.
Presale contract. A confirmed buyer can unlock higher LTC.
Partner equity. Equity partners contribute down payment in exchange for profit share.
Cross-collateralization. Equity in another property can reduce cash required.

Get Your Construction Loan Terms in 24 Hours

At Lendoor, we move fast. Submit your deal and get terms within 24 hours — including your maximum LTC, rate, and fee structure. Visit lendoor.com to get started.

Lendoor LLC | NMLS #1997062 | 727 S Hartford St, Unit 220, Chandler, AZ 85225 | This content is for informational purposes only and does not constitute a commitment to lend.