Nelson Funding Closes $3,499,000 SFR Spec Construction Loan in Saint George, UT

Understanding Construction Loans for Luxury Single-Family Spec Projects

Securing financing for a luxury single-family speculative (spec) project requires a specialized approach. These are not your typical construction loans; they’re designed for developers and builders who are building a high-end home without a committed buyer. Our recent closing of a $3,499,000 construction loan for a luxury spec home in Saint George, UT, demonstrates how this type of financing can be used to bring a high-end project to life.


Key Metrics in Luxury Spec Construction Loans

When a lender evaluates a loan for a luxury spec home, they look at two primary metrics to assess the risk and determine the loan amount:

  • Loan-to-Cost (LTC): This ratio compares the loan amount to the total cost of the project, including land acquisition and all construction expenses. Our recent loan had an 84% LTC, which means the financing covered a significant portion of the total project costs, reducing the developer’s out-of-pocket expenses.
  • Loan-to-Value (LTV): This ratio compares the loan amount to the appraised value of the finished home. A 69% LTV on our recent deal indicates a strong projected value for the completed property, which is a key factor for lenders. The lower the LTV, the less risk the lender assumes.

Why These Loans are Critical for the Luxury Market

Construction loans for luxury single-family spec projects are crucial for developers who want to capitalize on high-end real estate markets. These loans provide the necessary capital to build a home to exacting standards, using high-quality materials and finishes that attract discerning buyers. By using a spec-financing model, developers can build a move-in-ready home that appeals to a broader audience without the lengthy customization process of a custom build.

Nelson Funding remains very active in the luxury single-family residential sector. We understand the unique needs of builders and developers in this space and are committed to providing tailored financial solutions. To learn more about how our team can help with your next project, contact us at lo***@***********ng.com or 801-845-0092.

About Us:

Nelson Funding is a nationwide commercial loan broker and direct lender helping borrowers get the best possible financing for their respective projects. Nelson Funding has provided financing for over 80 projects and placed more than $600mm of capital. Nelson Funding has the experience to get almost any project funded: from new construction to cash-out refinances, land development, and more. Nelson Funding specializes in construction funding, bridge funding, and conventional term financing products.

Nelson Funding remains committed to helping our clients secure the best financing for their respective commercial real estate projects despite a rising interest rate environment and tightening lending standards. With Nelson Funding’s capital market relationships and highly experienced team we are still placing high leverage debt for all deal types including land development, single family construction, multifamily construction, industrial, office, retail, hospitality, special-use, cannabis and more.