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New Construction Loans in Rochester, Minnesota

Rochester, MN has 19 new construction lenders serving the city. Loan amounts average approximately $581,459. The median interest rate for loans in Rochester is 10.4%. The typical term offered for loans is 21 months. The average hard money loan issued in the city carries a 2.9 point origination fee. The median loan to value offered for loans in Rochester is 72%.

Loan Example 1

Rosalyn wants to acquire a land plot in Rochester, MN and build a new home to sell it for a profit. Along with the $310,000 cost of the plot, Rosalyn approximates she will require around $400,000 in construction expenses to finish the home. She applies for a new construction loan from Success Funding Company with the following stipulations: 1) a 12 month note at 11% interest, 2) interest only payments made each month, 3) 3 origination points paid at closing by the borrower, and 4) a 60% loan to value (LTV) on the plot purchase and the construction expenses. There will be no pre-payment penalties on the deal and construction expenses will be paid out over multiple draws. According to the terms of this loan, Rosalyn will need to pay $284,000 plus $12,780 in origination fees at closing, then will begin making $3,905 monthly payments. If Rosalyn sells the property for $1,020,000 she will make a total profit of $250,360 after repaying the principle amount and subtracting the origination expense and cumulative interest payments.

Loan Example 2

Lorene is a real estate investor and she decides to buy a land plot in Rochester, MN and build a new duplex. She applies for a construction loan from Blue Sky Funding Corporation with the following stipulations:

  • $260,000 sales price for the land
  • $400,000 in building costs
  • 85% loan to value (LTV)
  • 12 month length
  • 10% rate of interest
  • 2% origination fee

Based on a projected $920,000 re-sell after the 12 month term, the numbers for this project will be the following:

$920,000 sales price
- $561,000 principle on note (85% LTV)
- $99,000 down payment (15% on 85% LTV)
- $11,220 origination fee (2% of the $561,000 principle)
- $56,100 total interest paid (12 months x 10% interest)
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= $192,680 gross profit

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