Yes. A construction loan can cover both the lot and the build, as long as the lender sizes the loan on total project cost instead of just the construction budget. That is how InstaLend structures its new construction loans: you bring the project (land plus build), we look at the loan-to-cost ratio, and funding is split between closing and milestone draws.
The details decide whether this works for your deal. How much of the land is financed, when the money moves, what you need to qualify and what happens at month 12 all change your numbers. Here is the straight version.
A construction loan is short-term financing for ground-up building, released in stages (draws) as work is completed. Whether it also pays for the dirt depends on how the lender defines the project.
Some lenders only finance the build and expect you to already own the lot. Others, including InstaLend, count the land acquisition inside the project budget. Even government-backed programs treat the cost of the land as an eligible cost in a construction-to-permanent loan, according to the USDA Rural Development lending handbook.
You submit one budget with two big lines: what the lot costs and what the construction costs. The lender adds them up, applies its maximum loan-to-cost (LTC) ratio, and the gap between that number and the total is the equity you bring.
With InstaLend, new construction loans run from $50,000 up to $5M+ and go up to 90% LTC. On teardown-and-rebuild projects, that 90% applies to acquisition and build combined.
LTC compares the loan to what the project costs you, not to what it might be worth after it is built. Loan-to-value works the other way around. On a ground-up loan, cost is the number that anchors the deal, which is why the lot price matters as much as the build budget.
Here is an illustration with round numbers. It shows the maximum leverage; your actual terms depend on underwriting.
|
Line item |
Amount |
|
Lot purchase |
$100,000 |
|
Construction budget |
$300,000 |
|
Total project cost |
$400,000 |
|
Maximum loan at 90% LTC |
$360,000 |
|
Your equity (10%) |
$40,000 |
The lot is part of the $400,000 the loan is measured against. That is the difference between a land-plus-build structure and a build-only loan, where you would need to cover the lot with your own cash first.
Illustrative only. Actual loan amount, LTC and costs are set at underwriting.
Once the loan closes, construction funds are not handed over in one lump. They are released as milestones hit: foundation, framing, mechanicals, finish work. You pay interest only on what has been drawn, so carrying costs stay low early in the build.
Each wire release carries a $30 wire fee and a $270 inspection fee, deducted from that draw. For a deeper walkthrough, see our guide to construction loan draw schedules and the draw request portal.
Not every construction loan treats land the same way, and not every structure suits an investor. Here is how the three common options compare.
|
Ground-up hard money |
Construction-to-perm (single close) |
Bank stand-alone (two close) |
|
|
Qualifies on |
LTC + experience |
Personal income (DTI) |
Personal income (DTI) |
|
Income docs |
None required |
W-2s + tax returns |
W-2s + tax returns |
|
Closings |
One construction loan |
One closing, converts to 15 or 30-year mortgage |
Two (build, then permanent) |
|
Typical approval time |
24-48 hour pre-approval |
4-8 weeks |
4-8+ weeks |
|
Best for |
Builders and investors who sell or refinance |
Owner-occupants and long-term holders with simple income |
First-time builders with W-2 income |
If you plan to hold the property as a rental, the path is simple: use the construction loan for the build, then move into an SFR rental loan at completion. If you are building to sell, the sale pays off the loan.
Asset-based does not mean no requirements. It means the requirements are about the project, not your pay stub.
For the full checklist, read our breakdown of new construction loan requirements.
This is where land-plus-build financing earns its keep. You can request pre-approval in 24-48 hours, before you close on the land or sign with a builder. That lets you bid on lots knowing the financing side is already moving. Start with pre-approval.
A combined loan is only as good as the budget behind it. Watch for these.
At InstaLend, our new construction loans help real estate investors finance ground-up residential projects, including land acquisition and construction costs. With loan amounts from $50,000 to $5M+ and financing of up to 90% of the total project cost, you can plan your land purchase and build under one financing structure, subject to underwriting.
We offer 24–48-hour pre-approval, asset-based qualification without W-2s or tax returns, and no prepayment penalties. Our loans support 1–4-unit residential projects across 46 states, with eligibility based on your project budget, construction experience and other underwriting requirements.
Planning a land-plus-build project? Apply for pre-approval with InstaLend to review your financing options before purchasing the lot or beginning construction.
No. You can get pre-approved before you buy the lot, and InstaLend's application asks for your total budget, land plus construction. Owning the land already can reduce the cash you need at closing, since it counts toward the project cost.
Not with InstaLend. Approval is asset-based and rests on the project's LTC and your construction experience. See our post on income verification for construction loans.
Up to 90% of total project cost on InstaLend's construction loans. The exact figure depends on the deal, the location and your experience.
Within 24-48 hours of submitting your project details. Closing timelines vary by project. Here is more on how fast you can get a new construction loan.
You sell the property or refinance into a long-term loan. There is no prepayment penalty, so you can pay off early without fees.
Yes, with support. New investors can qualify by partnering with a licensed contractor and bringing a detailed plan and budget.