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Atherton properties command premium prices that often justify custom builds over buying existing homes. Construction loans bridge the gap between lot purchase and finished residence.
Most Atherton projects involve tear-downs or ground-up estates exceeding jumbo loan limits. Lenders treat these as higher-risk transactions requiring substantial reserves and proven contractor relationships.
Expect 20-25% down minimum, often closer to 30% for lots over $3 million. Credit scores need to hit 680 minimum, but 720+ unlocks better terms.
Lenders scrutinize contractor credentials and project plans. Your builder needs proper licensing, insurance, and a track record with projects at this scale.
Regional banks dominate Atherton construction lending. They know local contractors and understand lot values better than national lenders.
Portfolio lenders offer more flexibility on loan amounts and project timelines. We work with six local institutions that regularly fund $5-15 million construction projects.
Construction-to-permanent loans save you from refinancing costs but lock you into one lender. Standalone construction loans give flexibility to shop rates when converting to permanent financing.
Budget 15-20% above your contractor estimate for unexpected costs. Lenders hold contingency reserves, but cost overruns kill more Atherton projects than anything else.
Bridge loans work for quick renovations under six months. Construction loans make sense for ground-up builds or gut renovations taking 12-18 months.
Hard money fills gaps when you need fast funding or your contractor lacks major lender relationships. Rates run 3-5 points higher but close in two weeks versus 60 days.
Atherton building permits take 4-8 months minimum. Factor this into your construction loan timeline since lenders charge commitment fees for extended approval periods.
Town of Atherton design review adds another layer of approval. Properties in certain zones face additional restrictions that extend timelines and increase soft costs.
Rates typically run 1-2% above conventional mortgage rates as of February 2026. Expect 7.5-9% depending on your credit profile and project risk. Rates vary by borrower profile and market conditions.
Yes, most lenders structure these as lot purchase plus construction. You need enough equity in the existing property or cash to cover the 20-30% down requirement on total project cost.
Lenders release funds in stages tied to completion milestones. An inspector verifies work before each draw. Expect 4-6 inspections from foundation to certificate of occupancy.
You pay overages out of pocket before the lender releases the next draw. This is why we recommend budgeting 15-20% above estimates and maintaining strong reserves.
No, these are typically jumbo loans with 20%+ down. PMI doesn't apply. Lenders may require builder's risk insurance throughout construction.
Construction Loans in Atherton