BFI Blog

Spec Loans

Spec loans are used when a builder, developer or investor does not have a specific buyer lined up for purchase of their completed project. “Spec” is short for “speculating” because the builder or investor is operating under the speculation that they can sell the property for a profit. According to eConstructionLoans.com, “For this reason, the builder or investor is not expected to have debt ratios calculated with them carrying this loan. Bank SPEC construction loans will require tax returns, but the analysis of those is generally limited to trying to determine if the guarantor(s) have enough income to meet their own obligations during construction and marketing time.”As with other loans, interest rates and terms are determined and agreed upon by both parties prior to and funds being lent. Interest rates will vary by market and lender, while credit worthiness is generally not considered with spec loans.

    Spec Homes and Pre-Sale Homes- Know The Difference

    In the world of new home construction, there are important differences between home types, and knowing those differences (and what they entail) is hugely important when traversing new home building..

    Read More >

    Construction Loan Terminology - What it all Means

    If you’re thinking of applying for a construction loan, there is a lot to consider, and while doing your research, you may run into some terms you’re unfamiliar with. Below is an explanation of some..

    Read More >

    SUBSCRIBE TO OUR NEWSLETTER AND KEEP UP TO DATE