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Ground-up construction loans for Smoky Mountain cabins
Financing to build from the ground up, lot included. Experienced builders can borrow up to 90% of the total project cost.
Construction loan terms
| Experienced builders | up to 90% of cost |
| Standard | up to 85% of cost |
| Limit on finished value | 70 to 75% |
| Lot cost financed | up to 70% |
| First-time builders | programs available |
| Smallest loan | $75,000 |
Builders with fewer recent projects, and smaller markets, are usually limited to 80% of cost.
Two limits decide the loan
Loan-to-cost measures the loan against what you spend on the lot and the build. Loan-to-value measures it against what the finished property will be worth. A construction loan has to fit inside both.
- The lot: up to 70% of what you paid can be financed.
- The whole project: normally up to 85% of cost.
- Experienced builders in major markets: up to 90% of cost.
- Less active builders and smaller markets: usually up to 80% of cost.
- Always: no more than 70 to 75% of the finished value.
Example
| Lot | $120,000 |
| Construction budget | $580,000 |
| Total cost | $700,000 |
| Finished value | $950,000 |
| 85% of cost | $595,000 |
| 90% of cost, experienced builder | $630,000 |
| 75% of finished value, the ceiling | $712,500 |
Who qualifies
Your record sets your leverage. Builders with completed projects get the most. First-time builders are not shut out: we have programs for them too.
Building in the Smokies
- Slope. Most cabin lots are steep. Foundations, driveways, grading and retaining walls take a larger share of the budget than on flat ground, so price the site work from a real bid.
- Septic sets the bedroom count. Away from city sewer, the septic permit states how many bedrooms the system is approved for. Have the soil evaluated before you buy a lot, because it decides how large a cabin you can build and advertise.
- Fire code for large cabins. Cabins that sleep 13 or more face stricter fire code and often need sprinklers. Settle the occupancy with the fire marshal before the plans are final.
- Rental eligibility. If the cabin is meant to rent by the night, confirm the zoning and any covenants on the lot allow it before you break ground.
- Access and utilities. Private roads, wells and long utility runs are common. Check road maintenance agreements and the cost to bring power and water to the site.
From construction loan to rental loan
Many investors build a cabin to keep. When the cabin is finished and furnished, a DSCR rental loan pays off the construction loan and replaces it with long-term debt, qualified on the cabin’s projected nightly income.
Finishing a stalled build
A construction completion loan lends against the project as it stands today and adds what is needed to finish it.
Documents we ask for
- Loan application and personal financial statement
- A line-item construction budget with a clear scope of work. Draws are paid against it
- Plans and drawings
- Your general contractor’s license, workers’ compensation certificate and recent completed projects
- Your own projects from the last 2 years, with settlement statements
- Two months of bank statements showing reserves
- Insurance and title company contacts
The full list is in our hard money loan document checklist.
Construction loans: common questions
Normally up to 85% of the total project cost, and up to 90% for experienced builders in major markets. The loan must also stay within 70 to 75% of the finished value.
Yes. Up to 70% of the lot cost can be financed, as long as the total loan stays inside the loan-to-cost limit.
Yes, we have first-time builder programs. Leverage rises with a record of completed projects.
Yes. Building to rent is common in Sevier County. Confirm that the lot’s zoning and covenants allow nightly rental, and plan to refinance into a DSCR rental loan when the cabin is complete.
Yes. A construction completion loan is based on the current as-is value plus the cost to finish.
Have a lot and a set of plans?
Send the address, the price and what you plan to do with the property. We will reply with the leverage and pricing that fit your deal.