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Construction Loan

Generations of residential and commercial construction loans.

A & A Funding Corp has been providing construction lending in Phoenix, Arizona and the southwest for more than 40 years.  As a private money lender, we also underwrite our loans in-house, which means we can get them done quickly and with very little hassle.

Types of Construction Loans

  • Spec construction: Project based on speculation and sold for profit. Can be an individual or Business ( LLC or Corporation)


  • Owner builder: Owner is building the property for personal use or occupancy.


  • Construction completion: Project is partially completed and funds are needed to finish.


  • Rehab Const: Funds are needed for property improvements or “rehab,” normally the property will be sold after project completion.

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Construction Concept AdobeStock_83182844

Typical Scenarios for Construction Loans

  • Ground-up construction: Loan will cover a percentage of construction costs. This normally will be done where the   lot or land is already owned.

  • Lot and Construction: A loan that covers both the construction costs and the purchase of the lot.

  • Construction completion:  If the initial investment runs short A&A Funding will make a loan to cover the cost to complete only. 

  • Rehab Construction:  A loan to cover a percentage of the purchase of the property, and additionally a similar percentage of rehab costs.

Construction Loan Terms

Interest Only

monthly payments are for the interest on the note only, and wont include any principle reduction.

Construction loan basics

  • Loan amounts Up to 70% of construction  costs

  • Payments based only on funds that have been disbursed

  • Owner builder or Spec

  • 12-18 month term


Loan term -12 to 18 months

Most of our construction loans are for a 12-month period and will be paid off when the property is completed, sold or refinanced.


18-month or longer terms are available if needed, and even longer on approval for more complex projects like apartments of commercial.

Construction Loan Repayment

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A&A Construction loan payments are Interest only and based only on the funds that have been disbursed, not the entire loan amount that has been approved.

For a few years after the real estate crash on 2008, State and federal regulations required lenders making construction loans to fund the entire loan at close. The problem with that of course is that the borrower was obligated to start making payments on the full balance of the loan. Nowadays, A&A Funding has the ability to fund only what money is needed, when needed, and the borrower’s initial payments are based only on what money they have drawn. This make a construction project much easier to afford.

Typical Construction Loan Documentation

Leasing a Home

In addition to the usual things lenders need to have to make a loan, construction loans have a few extra requirements:

  • Completed and Permitted “Stamped” set of construction plans.

  • “Course of Construction” insurance. This is a policy that covers the project & Liability as it’s being built. These polices can be converted into normal homeowner’s insurance after completion.

  • Detailed construction budget along with the general contractors bid, or subcontractor bids if owner-builder.

  • Draw schedule, this will based on the budget, but broken down into a timeline to coincide with the progress of the project.

Why Choose an A & A Loan?

Our history as a go-to lender in Phoenix has proven us to be quick to close transactions. This means we can save deals that would otherwise not move forward, and we are ready and willing to help clients with poor credit or no credit history. We use out-of-the-box thinking and our 40-year history to help our clients achieve the funding they need. With multiple loan products and in-house underwriting, we’re ready to help.

For our realtor clients, we also work to save transactions that would otherwise be denied by your typical lending institution. Our programs are flexible, and our dedication to a fast-close ensures your transaction can still be completed on time, despite a last minute bank turn down.

Give us a call so we can start a conversation to see if hard money lending or subprime lending finance options are right for you. 

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