A builder line of credit is a revolving bank facility underwritten on the builder's balance sheet and years of tax returns. Ledger does not offer one. Ledger funds project-based construction loans, one per home, that run at the same time under a $10 million standard exposure cap per guarantor. For most spec builders that works like a guidance line: approved capacity, drawn one project at a time, released as each home sells.
- First loan closesEntity, guarantor, and track record go on file.
- Next lot, next loanProject package only. No full re-underwrite.
- Loans run in parallelTracked as total dollars outstanding, not a count.
- Home sells, loan pays offNo prepayment penalty. Equity returns.
- Capacity freesThe payoff makes room for the next loan.
Project-Based Builder Financing at Ledger: Quick Facts
- Loans per builder
- No count limit
- Standard exposure cap
- $10M outstanding per guarantor
- Above $10M
- Global review, good for 12 months
- Loan size, each
- $150K to $5M
- Leverage
- Up to 90% LTC, 75% LTARV
- Term
- 12 to 18 months, interest-only
- Repeat borrower paperwork
- Project package only
- Tax returns
- Not required under $10M
- Recourse
- Limited recourse available
- Payoff at sale
- No prepayment penalty
Running more than one lot? Get a term sheet on the next one.
Ledger funds spec home financing up to 90% LTC, $150K to $5M per home, with draws in 3 to 5 business days. Repeat borrowers send the project package and skip the rest.
What a Builder Line of Credit Is
A builder line of credit is a revolving credit facility a bank extends to a home builder. The builder draws on it to buy lots and fund construction. The builder repays it when homes sell, then draws again. The line has a total limit, a per-home sublimit, and a cap on unsold spec homes. The bank reviews and renews it once a year.
Banks also call it a construction line of credit, a guidance line, or a master construction facility. A guidance line is the version most spec builders see: the bank approves total capacity, and each home still gets its own note, its own appraisal, and its own draw schedule under that cap.
The bank underwrites the line on the builder, not the project. That is the reason it is hard to get.
What a Bank Requires for a Builder Line of Credit
Requirements vary by bank. The list below is the common set.
- Two to three years in business with completed and sold homes.
- Two to three years of business and personal tax returns that show profit.
- Financial statements, often reviewed or audited above a few million in capacity.
- A personal guarantee from every owner, usually full recourse.
- Liquidity and net worth covenants, tested each quarter or each year.
- A deposit relationship. Many banks want the operating accounts.
- A cap on unsold spec homes, often two to four at a time.
- Annual renewal, at the bank's option.
The catch. A line of credit is a promise from the bank, and the bank can change it. Banks cut builder lines in 2008 and again in 2023 when deposit costs rose. A builder with four homes framed on a line that is frozen at renewal has a problem a project-based loan does not create. Each project-based loan is committed for its full term.
Line of Credit vs Project-Based Financing for Contractors
The two products answer different questions. A line of credit asks whether the bank trusts the builder's balance sheet. A project-based construction loan asks whether the project works: the cost, the completed value, the builder's track record, and the exit. Here is how they compare on the points that matter on a spec build.
| Point | Builder line of credit (bank) | Project-based construction loans (Ledger) |
|---|---|---|
| Underwritten on | The builder's balance sheet and tax returns. | Each project's cost, value, and track record. No tax returns under $10M exposure. |
| Commitment | Revolving. Renewed yearly at the bank's option. | Committed for the loan term, 12 to 18 months, on each home. |
| Leverage | Often 65% to 80% of cost, with a per-home sublimit. | Up to 90% of cost and 75% of completed value, per home. |
| Capacity | A fixed line amount, often with a cap on unsold specs. | $10M outstanding per guarantor on the standard package. More with a global review. |
| Paperwork per home | Appraisal, budget, and a draw schedule under the line. | The same project package. Entity and guarantor files stay on record. |
| Recourse | Full recourse personal guarantee. | Limited recourse available for qualifying borrowers. |
| Time to first close | Weeks to months to open the line, then days per home. | As fast as 21 days on the first loan, faster on repeat loans. |
| Who qualifies | Established builders with years of returns and sold homes. | Experienced builders, and first-time builders with a qualified GC. |
| Rate | Lower. Bank cost of funds plus a spread. | Higher. Private capital priced on the project. |
The bank line wins on rate. The project-based loan wins on leverage, speed, commitment, and who can get one. A builder with the balance sheet for a bank line and the patience to open one can run both: the line for the lots the bank will take, project-based loans for the ones it will not, or for the fourth and fifth spec the line caps out on.
How Builders Fund Several Homes at Once Without a Line
A project-based lender tracks exposure by dollars outstanding, not by a count of homes. At Ledger the standard cap is $10 million outstanding per guarantor. Each loan sits under that cap until the home sells and the loan pays off. Then the capacity frees for the next lot. The practical limit for most builders is not the cap. It is equity.
- Close the first loan. The first loan carries the full underwrite: the entity documents, the guarantor's financials and credit, and the construction track record. Five or more completed projects in the last three years qualifies as Experienced. A first-time builder qualifies on a licensed third-party GC's record through the first-time builder program.
- Send the project package for each new lot. The lot contract or deed, plans, the construction budget, the appraisal, and the GC agreement if a third party builds it. The entity and guarantor files are already on record. Repeat borrowers do not resubmit a loan application. A new credit and background authorization is signed every 90 days.
- Run the loans in parallel. Each home has its own draw schedule and its own interest reserve. Draws fund in 3 to 5 business days, up to two a month per loan, no minimum draw.
- Sell the home and pay off the loan. There is no prepayment penalty. The sale proceeds retire the loan, and the builder's 10% equity plus the profit come back.
- Roll the equity into the next lot. The payoff frees exposure under the cap. The returned equity funds the next 10% down. A builder with $200,000 of equity can keep four $400,000 homes in motion on a rolling basis.
Worked Example: Four Spec Homes at Once
A builder in a suburban market has four lots and a buyer pool at $550,000. Each home costs $450,000 all in: lot, hard costs, soft costs, and the interest reserve. Each loan is sized at 90% of cost, so the builder funds 10% per home. The four loans run at the same time.
| Lot | Total cost | Loan at 90% LTC | Builder equity | Completed value | LTARV |
|---|---|---|---|---|---|
| Lot 1 | $450,000 | $405,000 | $45,000 | $580,000 | 69.8% |
| Lot 2 | $450,000 | $405,000 | $45,000 | $580,000 | 69.8% |
| Lot 3 | $450,000 | $405,000 | $45,000 | $580,000 | 69.8% |
| Lot 4 | $450,000 | $405,000 | $45,000 | $580,000 | 69.8% |
| Total | $1,800,000 | $1,620,000 | $180,000 | $2,320,000 | 69.8% |
Total outstanding is $1,620,000, well under the $10 million cap. The builder's equity in the ground is $180,000. When Lot 1 sells at $580,000, the $405,000 loan pays off with no penalty, the $45,000 equity comes back, and the capacity for a fifth loan opens. The builder does not reopen a line, wait for a renewal, or ask permission to start the next home. The next home is its own loan on the same file.
Where the 10% comes from. Each loan at 90% LTC leaves 10% of cost for the builder, plus the closing costs. On a $450,000 home that is about $45,000 in equity. The interest reserve sits inside the loan, so the builder does not carry monthly interest out of pocket during the build. Our construction loan calculator shows the reserve and the carry on your numbers.
When to Pick Which
- Pick a bank builder line if you have three or more years of profitable returns, a bank that knows you, a deposit relationship you want to keep, and spec volume the bank is willing to cap at. The rate is lower and you earned it.
- Pick project-based construction loans if you are under three years in, if you keep more specs in motion than a bank will allow, if you want 90% of cost instead of 70%, if you do not want full recourse, or if you need to close the next lot in three weeks instead of waiting on a renewal.
- Run both if you can. Put the lots the bank will take on the line. Put the rest, and the overflow above the bank's spec cap, on project-based loans. Ledger takes a lien on the home it funds and nothing else, so the two books stay separate.
How Ledger Works With Repeat Builders
- One loan per home, run in parallel. Exposure is tracked in dollars, up to $10 million outstanding per guarantor on the standard package.
- No tax returns on the standard package. Above $10 million, a global review adds a personal financial statement, four months of bank statements, an REO schedule, three years of returns, and a lien search. That approval holds for 12 months.
- Repeat borrowers send the project package only. Entity documents, guarantor financials, and track record stay on file. A fresh credit authorization every 90 days.
- Up to 90% LTC and 75% LTARV per home, $150,000 to $5,000,000 per loan, 12 to 18 month interest-only terms.
- Limited recourse available for qualifying borrowers.
- Draws in 3 to 5 business days, up to two a month per loan, no minimum draw. The draw process is the same on every loan.
- No prepayment penalty, so the sale pays off the loan the day it closes.
The products behind this are our spec home financing for builders selling the homes, ground-up construction loans for custom and contract builds, and the build to rent loan when the plan is to hold and refinance into a rental loan. Lending in 45 states and DC; see where we lend.
Frequently Asked Questions
Does Ledger offer a builder line of credit?
No. Ledger does not offer a revolving line of credit. Ledger funds project-based construction loans, one loan per home or project, and a builder can hold several of them at the same time. A guarantor can carry up to $10 million in outstanding Ledger loans on the standard underwriting package, and more than $10 million with a global exposure review. For most spec builders, that works the way a bank guidance line works: approved capacity, drawn one project at a time.
What is a builder line of credit?
A builder line of credit is a revolving credit facility a bank extends to a home builder. The builder draws on it to buy lots and fund construction, repays it when homes sell, and draws again. Banks underwrite the line on the builder's balance sheet: two to three years of business and personal tax returns, audited or reviewed financial statements, a personal guarantee, liquidity and net worth covenants, and an annual renewal. Most banks also set a per-home sublimit and cap the number of unsold spec homes on the line.
What is a construction line of credit, and how do I get one?
A construction line of credit is the same product under a different name: a revolving facility a bank sets up for a builder or general contractor to fund construction costs across projects. To get one, a builder usually needs two or more years in business, tax returns that show profit, a track record of completed and sold homes, liquidity on deposit at the bank, and a personal guarantee. New builders and builders with one or two completed homes rarely qualify. A project-based construction loan is the normal path for them.
Can I have more than one construction loan at a time with Ledger?
Yes. Each home or project gets its own loan, and the loans run at the same time. Ledger tracks total outstanding balance per guarantor. Up to $10 million outstanding uses the standard underwriting package. Above $10 million, Ledger runs a global exposure review: a personal financial statement, four months of bank statements, a schedule of real estate owned, three years of tax returns, and a background and lien search. That approval is good for 12 months.
How many spec homes can I build at once?
The limit is dollars outstanding, not a count of homes. At $400,000 per loan, a builder can have roughly 25 homes in progress under the $10 million standard exposure cap. The practical limit for most builders is equity: each loan at up to 90% loan-to-cost needs the builder to fund the other 10% of cost plus closing costs, and each sale returns that equity for the next lot.
Do repeat borrowers go through full underwriting on each loan?
No. Once a builder has closed a loan with Ledger, the entity documents, guarantor financials, and track record are on file. Each new loan needs the project package: the lot contract or deed, plans, the construction budget, the appraisal, and the GC agreement if a third-party GC builds it. A new credit and background authorization is signed every 90 days. Repeat borrowers do not resubmit a full loan application.
What does a general contractor line of credit require at a bank?
A GC line of credit at a bank is a working-capital facility, usually secured by receivables, equipment, and a personal guarantee. Banks look for two to three years of profitable tax returns, a current personal financial statement, a backlog report, bonding capacity, and a deposit relationship. The line funds payroll and materials between owner draws. It does not fund the GC's own spec homes; those need construction loans sized to the project.
Can a first-time builder get a builder line of credit?
Not at a bank. A builder line of credit is underwritten on years of completed and sold homes. A first-time builder can fund the first project with a construction loan instead. Ledger's first-time builder program qualifies the loan on the track record of a licensed third-party GC with five or more completed projects in the last three years. After the first home sells, the builder is a repeat borrower, and the next loans move faster.
Ready to put the next lot under contract?
Up to 90% of cost per home, $10 million of capacity per guarantor, and a project package instead of a renewal. Get a term sheet, or run the numbers first.
Estimate Your Rate Get a Term SheetRelated Reading
Related: Spec Home Financing for Builders: construction loans for homes built to sell, up to 90% LTC.
Related: Construction Loan Draw Schedule: a sample $500K schedule by milestone, the interest carry math, and the free draw schedule template.
Related: First-Time Builder Construction Loans: no prior builds required when your GC has the experience.
Related: LTC vs LTV vs LTARV: how lenders size a construction loan, with worked examples.