Your Complete Guide to a Ground Up Construction Loan in Florida
Florida’s real estate market is booming, driven by strong population growth and high demand for new properties. For developers, investors, and even first-time home builders, this presents a massive opportunity. If you’re planning to build a property from scratch, a ground up construction loan is the essential financial tool designed to turn your blueprint into a reality.
Unlike a traditional mortgage, this specialized financing is structured to cover everything from land acquisition to the final certificate of occupancy. This guide breaks down exactly what a ground up construction loan is, how the process works, key requirements, and how to get the funding you need to capitalize on today’s market.
What Is a Ground Up Construction Loan?
A ground up construction loan is a short-term financing solution used to fund the cost of building a new structure on a piece of land. Whether you’re building a single-family home, a multi-unit rental property, or a commercial building, this loan provides the capital for the entire construction phase.
The key difference from a standard mortgage is how the funds are distributed. Instead of a single lump-sum payment, a ground up construction loan is paid out in stages, or draws, as the project hits specific completion milestones. According to the Consumer Financial Protection Bureau (CFPB), this progressive funding schedule helps protect both the lender and the borrower by ensuring the project stays on budget and on time.
How Does the Ground Up Construction Loan Process Work? 🏗️
The loan process is structured to align with the building timeline. While every lender has slightly different procedures, the core steps remain consistent.
- Application and Approval: You’ll submit a detailed project plan, including architectural blueprints, a line-item construction budget, a project timeline, and information on your licensed general contractor. The lender evaluates the project’s viability and your qualifications.
- Closing: Once approved, you close on the loan. Often, the financing is structured as a land and construction loan, meaning the funds to purchase the lot and begin building are combined into one streamlined package.
- The Draw Schedule: This is the heart of a ground up construction loan. Funds are released incrementally as work is completed. An inspector will verify each stage—such as the foundation being poured, the framing going up, and the roof being installed—before the lender releases the next draw to your contractor.
- Interest-Only Payments: During the construction phase, borrowers typically only pay interest on the amount of money that has been drawn so far. This keeps monthly payments low and preserves cash flow while the property is not yet generating income.
- The Exit Strategy: A ground up construction loan is a temporary solution. Once construction is finished, the loan is paid off. This is usually accomplished in one of two ways:
- Selling the property for a profit.
- Refinancing the construction loan into a long-term, permanent mortgage if you plan to hold it as a rental or primary residence.
Why Florida Is a Hotspot for New Construction Projects ☀️
Ground up construction is especially popular in Florida for several key reasons, creating a high demand for specialized financing like the ground up construction loan.
- Massive Population Growth: Florida consistently ranks as one of the fastest-growing states in the nation. The U.S. Census Bureau reported that Florida was the nation’s fastest-growing state in 2022, creating immense and sustained demand for new housing.
- Persistent Housing Shortages: In many desirable markets across Florida, the inventory of existing homes for sale is extremely low. The National Association of Realtors (NAR) has noted that low inventory levels continue to put upward pressure on prices, making new construction a vital and profitable strategy to meet demand.
- Modern Building Standards: Building new allows developers to comply with the latest Florida Building Codes for hurricane resistance and energy efficiency. This results in safer, more insurable, and more desirable properties for modern buyers and renters.
Partnering with a Private Lender like Capital Funding
For many real estate investors and developers in Florida, a private lender offers significant advantages over a traditional bank. Capital Funding specializes in ground up construction loans designed for speed and flexibility.
Their program is built around the realities of real estate development:
- Fast, Asset-Based Approvals: Unlike banks that focus heavily on personal income and credit scores, Capital Funding underwrites loans based on the strength and potential of the real estate deal itself. This is ideal for LLCs, self-employed builders, and investors with complex financials.
- Flexible Loan Terms: They offer interest-only payments and loan terms tailored to the project’s timeline, ensuring your financing aligns with your construction schedule.
- High Leverage: With financing up to 85% of the total project cost, you can preserve your capital for other investment opportunities.
- Florida Market Expertise: Capital Funding understands the local nuances of permitting, zoning, and coastal construction, providing a smoother and more reliable funding experience from start to finish.
Build Your Vision from the Ground Up
A ground up construction loan provides the control, flexibility, and capital needed to build new properties and meet Florida’s soaring demand. Instead of fighting for limited inventory in a competitive resale market, you can create modern, high-value properties tailored to today’s buyers and renters.
With a financing partner like Capital Funding, you gain the support of a lender that understands the Florida market and can deliver the funds you need to build smarter, faster, and more profitably.
Sources
- Capital Funding. “Ground-Up Construction Program.” capitalfunding.com. Accessed October 5, 2025.
- Consumer Financial Protection Bureau (CFPB). “What is a construction loan?” consumerfinance.gov. Accessed October 5, 2025.
- National Association of Realtors (NAR). “Existing-Home Sales.” nar.realtor. Accessed October 5, 2025.
- United States Census Bureau. “Florida is Fastest-Growing State for the First Time Since 1957.” census.gov. December 22, 2022.
