Breaking Ground: How to Secure a New Construction Loan in Maryland

Building a new home or investment property in Maryland requires significant capital, and traditional mortgages don’t cover ground-up construction. That’s where new construction loans come in. These loans provide the funding needed to purchase land and finance the building process. However, getting approved isn’t as simple as securing a conventional loan.

With Maryland’s median home price at $412,300 in early 2025 and demand for new housing rising, builders and investors need fast, flexible financing to stay competitive. Banks have strict approval criteria and slow processes, making it difficult for many borrowers to get the capital they need. Fortunately, hard money lenders offer an alternative solution, providing investment property loans with fewer restrictions and quicker approvals.

So, how do you secure a new construction loan in Maryland? Here’s a step-by-step guide to help you navigate the process and fund your project successfully.

Step 1: Understand How New Construction Loans Work

New construction loans are short-term financing options designed to fund the building process. Unlike traditional mortgages, which finance completed homes, these loans cover:

• The cost of purchasing land (if not already owned)
• Labor and materials for construction
• Permitting and other regulatory expenses
• Interest payments during the building phase

Once construction is finished, borrowers typically refinance into a long-term mortgage or sell the property for a profit.

Step 2: Determine Your Loan Eligibility

Lenders consider several factors before approving a new construction loan, including:

• Credit Score– While traditional banks require excellent credit, hard money lenders focus more on property value and borrower experience.
• Down Payment– Most lenders require 20% to 30% down, ensuring borrowers have skin in the game.
• Builder Experience– Having a licensed contractor or builder with a track record of completed projects improves approval chances.
• Detailed Construction Plan– Lenders need a well-documented plan, including:

1. Blueprints and architectural designs

2. Estimated construction timeline
3. Itemized budget for labor and materials

• Exit Strategy– Lenders want to know whether you plan to sell the property, refinance, or rent it out after construction is complete.

Step 3: Choose the Right Lender

Borrowers can obtain new construction loans from different types of real estate lenders, including:

• Traditional Banks– Offer lower interest rates but require strong credit, high down payments, and extensive documentation. Approval can take weeks or even months.
• Hard Money Lenders– Focus on the value of the project rather than personal financials, offering fast approvals and flexible terms. Ideal for investors and builders needing quick capital.

If speed and flexibility are your priorities, hard money loans are often the best choice, especially for investors looking to secure a new construction loan in Maryland quickly.

Step 4: Prepare a Strong Loan Application

To improve your chances of getting approved, present a well-documented application with the following:

• Property Appraisal & Land Value– Lenders assess the property’s current and future value.
• Construction Budget & Timeline– A detailed budget with a realistic timeline assures lenders that the project is well-planned.
• Financial Documents– Expect to provide bank statements, proof of income, and credit history.
• Builder Contracts & Licenses– Having an experienced contractor with proper credentials reduces lender risk.
• Exit Strategy– A clear plan to refinance, sell, or lease the property makes lenders more confident in approving your loan.

Step 5: Secure Hard Money Loan Approval and Start Construction

Once approved, funds are typically distributed in stages based on project milestones. Hard money lenders release money in draws, meaning you’ll receive portions of the loan as construction progresses. These draws ensure funds are used correctly and keep builders accountable.

Throughout the process, real estate lenders may require property inspections to verify work completion before releasing the next payment.

Step 6: Transition to a Permanent Mortgage or Sell for Profit

Once construction is complete, you need a plan for repaying the loan. Investors and builders generally choose one of the following:

• Refinancing– Convert the short-term loan into a traditional mortgage with lower interest rates and longer terms.
• Selling the Property– If the goal is to flip the home, selling immediately helps repay the loan and lock in profits.
• Renting Out the Property– Investors can hold onto the property and generate rental income, refinancing into a long-term investment property loan.

Why Hard Money Loans Are the Best Choice for Builders in Maryland

Traditional banks make new construction loans difficult with their slow approvals and strict lending criteria. That’s why many Maryland builders turn to hard money lenders for faster funding and flexible terms.

Benefits of Hard Money Loans for New Construction

• Fast Approvals– Get funding in days instead of months.
• Less Strict Credit Requirements– Loan approval is based more on property value and borrower experience than credit scores.
• Flexible Loan Terms– Borrowers can negotiate repayment schedules that align with project timelines.
• Higher Loan-to-Value (LTV) Ratios– Hard money lenders typically offer higher funding percentages than banks.

For investors looking to secure a new construction loan in Maryland, hard money loans provides the speed and flexibility needed to complete projects on time.

Get Fast New Construction Financing with InstaLend

Looking to secure a new construction loan in Maryland without the hassle of bank delays? InstaLend offers fast approvals, competitive rates, and flexible terms to help you break ground on your next project. Whether you're building a single-family home, multi-family unit, or commercial property, our new construction loans  in Maryland provide the capital you need — without the red tape.

Ready to get started? Contact InstaLend today and get funded fast!