| Purpose | Business-purpose construction |
| Stage | Initial financing review |
| Examples | Hypothetical, not approved terms |
When a builder asks for 100% financing, the first question is: 100% of what? Purchase price, eligible project cost and completed appraised value are different bases. A high loan-to-cost ratio can reduce the equity contribution, but it does not by itself establish the closing advance or eliminate the need for working capital.
What 100% loan-to-cost means
LTC compares the loan commitment with costs the lender accepts. If eligible costs are $2 million, a hypothetical 100% LTC ceiling is $2 million. That covers the eligible cost subtotal in this example, before considering excluded costs, fees, required reserves or other loan limits. These figures explain the calculation and are not a Stonehaven offer.
Stonehaven works with lenders that can offer up to 100% LTC for qualifying construction projects. Availability depends on the lender and the specific deal. A program maximum is not an approval for a particular builder. Confirm the current limits for loan size, experience, credit, liquidity, location and project type with the actual financing source.
The completed-value limit can be the tighter test
Assume the same $2 million eligible budget, a $2.4 million completed valuation and a hypothetical 70% completed-value cap. That second test would limit the commitment to $1.68 million, below the $2 million LTC result. The cost-versus-loan difference becomes $320,000. Both percentages in this example are assumptions, not quoted terms.
Ask the reviewer to put each test on one page: eligible cost basis, LTC ceiling, completed-value ceiling and final proposed commitment. A projected profit margin is not the same as cash available to complete the work. An appraisal below the builder’s target can change the financing even when the budget stays unchanged.
Build a cash plan for three moments
Before closing: identify deposits, design, reports, permits and other costs that must be paid before funding. Ask whether any completed expenditures can count toward the required contribution and what proof is needed.
At closing: reconcile acquisition or payoff, closing costs, equity already invested and the lender’s initial advance. Ask whether points, interest reserves or other financed costs consume part of the commitment instead of adding construction dollars.
Between draws: compare contractor payment dates with inspection and reimbursement timing. Ask about holdbacks, retainage, minimum draw amounts and how change orders are handled. A financed construction budget can still require the builder to pay a bill before reimbursement arrives.
Compare two term sheets on the same budget
The offer with the highest percentage is not automatically the offer requiring the least cash. Compare initial proceeds, funded costs, draw rules, reserve requirements, interest treatment, extension conditions and the expected net proceeds at sale. Use the same cost schedule and exit assumptions for both quotes.
Can land equity reduce the contribution?
It may, depending on the lender’s accepted basis, ownership history and liens. Equity credit is not the same as cash-out proceeds. For an already-owned property, provide purchase history, improvements and current payoff so the reviewer can explain what may count. If two projects are planned, show both schedules and avoid counting the same reserve dollars twice.
For an initial Stonehaven review, send the project stage, acquisition or payoff, construction budget, completed-value estimate and builder experience. Ask specifically for the expected cash at closing and peak cash needed during construction, not just the maximum leverage.
Related builder guides
Atlanta Teardown and Rebuild Loans: From Purchase to New Construction · Construction Financing When You Already Own the Property: Equity and Mortgage Payoff
See how these questions come together in an anonymized acquisition, construction and refinance case study, with term tables and lessons for Georgia, Florida and Texas.