Can a construction lender finance the lot purchase and the build in one loan?

Yes. This $635,600 loan combined a $252,662 purchase price and a $442,600 construction holdback in a single facility, so the borrower closed on the lot and began the build under one note rather than arranging separate acquisition and construction financing.

How much cash does a builder need to bring to a combined acquisition-construction loan?

On this deal the borrower contributed $112,389.88 in equity against total project costs of $748,884.88, roughly 15% of the total capital stack, with the loan covering the purchase price, the construction budget, the interest reserve, and closing costs.

Why would a repeat borrower get a better rate on a second construction loan with the same lender?

This loan priced at 9.25% fixed, compared to 9.85% on the same sponsor's prior construction loan with the same lender months earlier. An established repayment history and completion track record on file with a lender can translate into better pricing on the next deal.

What is the difference between a one-draw and a multi-draw construction loan?

A one-draw structure releases the full construction holdback at a single milestone rather than in stages, reducing draw-inspection fees and administrative friction for a smaller build. This loan was capped at one draw with a $500 construction administration fee, compared to a two-draw structure on a larger project.

Do builders need to prove liquidity before closing a construction loan?

Yes. This loan required the sponsor to provide recent bank statements confirming at least $100,000 in liquidity before underwriting could proceed, a standard safeguard ensuring the builder can cover cost overruns or carrying costs beyond what the loan itself funds.

Case Study: $636K Combined Acquisition and Construction Loan for a Houston Spec Home

Deal at a Glance

Loan Amount	$635,600
Property	Ground-up single-family spec home lot
Location	Houston, Texas
Transaction	Combined acquisition + construction, draw loan
Lender	a private construction lender
Rate	9.25% fixed, interest-only
Term	12 months, up to two extensions at lender's discretion
Origination Fee	1.0% of loan amount ($6,356)
Purchase Price Funded	$252,662
Construction Holdback	$442,600, single draw ($500 fee)
Interest Reserve	$42,416.80
Total Project Cost	$748,884.88
Borrower Equity	$112,389.88
Max LTARV	70% (lower of internal valuation or appraisal)
Max LTC	85%
Liquidity Requirement	$100,000 confirmed via bank statements
Guarantors	Sponsor (repayment + completion) and a second individual (completion)
Closed	Q3 2025

The Deal That Walked in the Door

We are Commercial Lending Solutions, a commercial mortgage brokerage based in Los Angeles, and this deal came from the same Cedar City, Utah-based builder client we had just financed a spec build for in Houston's Near Northside a few months earlier. This time, the project was a new lot purchase in Houston, Texas (TX) paired with the ground-up construction budget, needing a single facility from a private construction lender that could close on the acquisition and fund the build without the borrower arranging separate purchase and construction loans back to back. Commercial Lending Solutions specializes in construction and bridge financing for spec-home builders and investors across Texas and nationwide.

Structuring an acquisition and a construction budget into one loan is common in the spec-building world, but it only works when the lender is comfortable underwriting a purchase price, a full construction line, and an interest reserve together as a single capital stack, rather than treating the lot purchase and the build as two separate credit decisions.

What Made It Hard

Combining two funding needs into one closing. The loan had to fund the $252,662 lot purchase and the $442,600 construction budget simultaneously, plus an interest reserve, without the deal collapsing into two separate, harder-to-coordinate loans.
Sizing the equity requirement correctly. Against $748,884.88 in total project cost, the sponsor needed to bring roughly $112,390 in cash, and getting that split right between debt and equity mattered for both loan approval and the sponsor's own capital planning.
A short acceptance window on the letter of interest, again just two days from issuance, requiring quick borrower turnaround to keep the underwriting clock on schedule.

How We Ran the Process

Trevor Damyan, a California-licensed real estate broker (CA DRE 02244836), placed this loan with a private construction lender, the same private construction lender from the sponsor's earlier Houston project, closing the letter of interest on August 19, 2025:

$635,600 total loan, combining the $252,662 lot purchase price and the $442,600 construction budget into a single first-mortgage facility
$42,416.80 interest reserve funded at closing to cover monthly interest during the build
9.25% fixed rate, interest-only, meaningfully tighter than the 9.85% rate on the sponsor's prior construction loan with the same lender a few months before, a rate improvement consistent with an established repayment relationship
12-month term with up to two extensions available at the lender's discretion
A single construction draw (versus a two-draw structure on the sponsor's earlier, larger project), each carrying a $500 construction administration fee, appropriate for a smaller build
Underwriting caps of 70% loan-to-after-repair-value and 85% loan-to-cost, with the sponsor required to demonstrate $100,000 in confirmed liquidity via recent bank statements before underwriting proceeded
$112,389.88 in borrower equity against $748,884.88 in total project cost, with the balance of settlement costs, origination points, underwriting, appraisal, and title/escrow fees layered into the closing
The same dual guaranty structure as the sponsor's prior deal: a personal repayment guaranty from the sponsor, plus completion guaranties from both the sponsor and a second individual

Net cash required from the borrower at closing came to roughly $140,272, reflecting the equity contribution plus closing costs after the loan proceeds were applied to the purchase and initial funding.

"Once a builder has proven he can execute and repay on the first deal, the second one should be easier and cheaper. That is exactly what happened here, the rate came down and the structure got cleaner."
, Trevor Damyan, Commercial Lending Solutions

Why We Won This One

The rate improvement between this deal and the sponsor's prior construction loan is the clearest evidence of why a repeat lending relationship pays off in this asset class: 9.25% versus 9.85% on a nearly identical loan structure a few months apart, with the same lender, the same guarantors, and the same broker relationship. Construction lenders price meaningfully on demonstrated performance, and closing the first deal cleanly set up better terms on the second.

Combining the acquisition and construction into one facility, rather than a separate purchase loan followed by a construction refinance, also saved the sponsor a second round of closing costs and underwriting friction on a project this size, letting the capital stack come together in a single, coordinated closing.

Is This Structure Right for Your Deal?

If you are purchasing a lot and building on it, financing both pieces in a single facility can save real time and money compared to sequencing separate loans. We arrange construction loans and bridge financing from a network of more than 1,000 capital sources nationwide.

Apply for financing or call us at 310.708.0690 to talk through your next spec build.

Trevor Damyan

Commercial Mortgage Broker, Commercial Lending Solutions | CA DRE 02244836

Trevor Damyan is a commercial mortgage broker at Commercial Lending Solutions with a background in structured finance at CBRE and Marcus and Millichap Capital Corporation. He specializes in bridge loans, construction financing, SBA programs, DSCR loans, and complex capital structures for investors and developers across all 50 states.

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