By K2 Capital | May 19, 2025 | Residential land loans, acquisition and development financing, builder finance
Land is consistently the hardest part of the capital stack for residential builders to finance. Banks are cautious with raw land and horizontal development, even when the builder has a proven track record and strong construction lending relationships. The result is that equity gets tied up controlling land positions when it could be deployed elsewhere.
We work with a capital partner that focuses specifically on residential land financing for experienced builders and developers.
Recent Example
A regional homebuilder had strong demand for new homes but was running into a bottleneck. Their bank was comfortable financing vertical construction but hesitant to expand land exposure. Each new subdivision required the builder to fund the land purchase and horizontal development out of pocket, which limited the number of projects they could carry at once.
We introduced a dedicated land lender that provided acquisition and development financing covering both the land purchase and horizontal improvements. The builder preserved capital for vertical construction and kept their development pipeline moving without having to choose which projects to delay.
How It Works
The lender provides land inventory loans, acquisition and development financing, and liquidity access lines designed to support builder land pipelines. In addition to funding the purchase, the program covers horizontal improvements: utilities, streets, curbs, gutters, sewer connections, and other site work required before vertical construction begins.
In many cases, the lender can also structure land and vertical construction financing together as part of a single relationship, simplifying the overall capital stack.
For experienced builders whose growth is limited by land capital rather than demand, this is a practical way to scale without overextending the balance sheet.
| Loan Types | Land inventory loans for finished or partially improved lots; acquisition and development loans for land purchases and horizontal improvements; liquidity access lines for builder land pipelines |
|---|---|
| Loan Size | Up to approximately $4,000,000 depending on project scope |
| Leverage | Up to 60 to 65% of total project cost |
| Collateral | Residential land positions including raw land, partially entitled land, or land requiring horizontal improvements |
| Use of Proceeds | Land acquisition, horizontal development including utilities and infrastructure, permitting and certain development soft costs |
| Borrower Profile | Experienced residential builders and developers with a demonstrated history of building and selling homes |
| Minimum Qualifications | At least 20 residential properties built or owned in the last 10 years; minimum guarantor net worth of approximately $1,000,000 excluding primary residence; minimum credit score of approximately 660 |
If this sounds like a fit for your situation, submit a request with some additional context. We will review it and determine whether this capital partner aligns with your situation.