Spec Home Financing
Build without an end buyer under contract. Interest-only during construction, inspected draws that track your actual schedule, and an exit that can go either way — retail sale or DSCR refinance.
Send us the lot, the plan, and the budget. We'll come back with terms.
Standard structure for spec builds. Exact terms depend on experience, submarket, and budget quality.
9.5%
Rates From
Up to 90%
Loan-to-Cost
12–24 months
Term
$150K
Min Loan
Interest-only
Payments
Sale or DSCR
Exit
Spec home financing is a ground-up construction loan for a home built without an end buyer under contract. You're building for the open market — "on spec" — and the lender is underwriting the same bet you are: that the finished house sells at the price the comps support, inside the window the submarket's absorption rate suggests.
Structurally it looks like any other construction loan. The lot and the vertical build are financed together, funds release in inspected draws as phases complete, and you pay interest only on the balance drawn rather than the full loan amount. The difference is in how it's underwritten and priced: no contract means the lender's exit depends on the market, so comps, days on market, and your track record carry more weight than they would on a pre-sold build.
The exit is the part worth planning first. Most spec builders assume a retail sale, and most sales close fine. But the strongest position is having both exits underwritten before you break ground — the retail comps and the projected rent. If the market softens, you refinance into a DSCR rental loan and hold instead of cutting price. That optionality costs nothing to plan and can be the difference between a good year and a bad one.
Four inputs decide your loan-to-cost, your rate, and your term. Knowing what each lender weighs is most of the job.
The lender's exit is your sale, so the completed appraisal drives everything. Underwriting starts with closed comps for similar new product in the same submarket — square footage, finish level, lot size — and sets the expected retail price from there. Loan size is capped by both loan-to-cost and a percentage of that completed value.
Absorption matters as much as price. A submarket where new spec product clears in 30–60 days supports a longer, cheaper loan than one sitting at 150 days. Slow DOM usually means a lower LTC, a bigger interest reserve, or a shorter term with extension options priced in.
Completed builds of similar scope are the single strongest input. Programs generally want at least one finished project; some accept first-time builders at a reduced LTC when a general contractor with verifiable history is on the team. Bring your project list, addresses, and final sale prices to the first conversation.
A line-item budget with real subcontractor bids gets better terms than a per-square-foot estimate. Most programs want a contingency line — typically 5–10% of hard costs — and will size the loan against total project cost including land, hard costs, soft costs, and carrying costs through the sale window.
Draws. Construction funds release against completed phases. You submit a request with photos and invoices, the lender's inspector verifies within about 48 hours, and funds wire in 1–2 business days. Most programs hold back roughly 10% of each draw until final inspection, releasing it at certificate of occupancy. A typical single-family spec build runs 5–8 draws, and interest accrues only on the drawn balance — which is why an accurate draw schedule directly lowers your carrying cost.
Exit one: sell. List at completion and repay the construction loan from sale proceeds. Clean and fast when your submarket's days on market cooperate. If the listing runs past your term, most lenders extend 3–6 months for a fee — budget for that possibility rather than being surprised by it. See fix & flip financing if your next project is a rehab rather than a ground-up build.
Exit two: hold. Refinance into a DSCR rental loan and keep the property. The new loan qualifies on the home's rent versus its payment — no tax returns, no W-2s — so a self-employed builder can hold indefinitely without personal income documentation. Run the numbers first with our DSCR calculator.
Spec is the deal type where lender fit varies most. Some construction programs only fund pre-sold builds and decline spec outright. Others fund spec but cap loan-to-cost well below what a builder with completed projects can get elsewhere. A few price spec almost identically to pre-sold in markets they know well. Going direct means testing that one lender at a time, weeks apart.
One application, 100+ programs compared. You give us the lot, the plans, the budget, and your project history once. We translate it into each lender's format, surface the programs that price competitively for spec product in your specific submarket, and bring back terms you can actually compare side by side.
We plan the exit with you. Because we also place DSCR and bridge financing, we can underwrite the hold scenario at the same time as the build. That means the construction loan gets structured with the refinance in mind — term length, prepayment terms, and title vesting all set up so the DSCR refi doesn't hit avoidable friction at completion.
Not financial advice. Market data and deal scenarios shown here are illustrative and based on public information available at time of publication. Investors should perform their own due diligence on current market conditions, property-level economics, insurance, and local regulations before making investment or financing decisions.
Tell us about the lot, the plan, and the budget. We'll come back with programs that fund spec in your market.
