Last updated: January 2026
Quick answer
Private construction loans offer South Florida residential developers faster approvals, flexible underwriting, and funding based primarily on the project rather than on the borrower’s income.
Bank construction loans offer lower rates but require extensive documentation, income verification, and longer timelines. Private loans are often ideal for developers who prioritize speed and flexibility.
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What is the difference between a private and a bank construction loan?
Construction loans fall into two main categories: private and bank-issued. While both fund ground-up real estate projects, the approval criteria, speed, and borrower experience vary significantly.
- A bank construction loan is typically issued by a traditional financial institution and requires full income documentation, a strong credit score, and underwriting based on personal financials. These loans can take 30–60+ days to close and are often better suited for owner-occupied builds.
- A private construction loan is issued by a private lender or fund and is typically based on the property’s value and project viability. These private loans are designed for real estate developers, spec builders, and investors who need speed, flexibility, and creative deal structures.
Why South Florida developers choose private construction loans
In fast-moving markets like Miami-Dade, Broward, and Palm Beach counties, developers need financing that keeps up with construction timelines and acquisition opportunities.
Private loans offer key advantages:
- Funding in 5–10 business days from complete submission
- No traditional income or tax return documents required
- Draw schedules customized to the project
- Approval based on the property and exit plan
- Ideal for spec homes, infill, and non-owner-occupied builds
Bank loans often can’t compete with that level of responsiveness.
Side-by-side comparison: Private vs bank construction loans
| Feature | Private Construction Loan | Bank Construction Loan |
| Funding speed | 5–10 business days | 30–60+ days |
| Income verification | Not required | Full income docs, tax returns, W-2s |
| Credit score requirements | More flexible (varies by lender) | 680+ typically required |
| Loan-to-cost (LTC) | Typically 65%–75% | Up to 85%, depending on borrower profile |
| Property type | Investment, spec, non-owner-occupied | Primarily owner-occupied |
| Underwriting criteria | Asset-based (property and project) | Full personal financial review |
| Draw schedule | Flexible, custom per deal | Bank-controlled, with inspections |
| Ideal borrower | Real estate investors, self-employed builders | High-credit, income-verifiable borrowers |
Private lenders like Marquee Funding Group are structured for developer clients who need speed and deal-specific structuring.
When to use a private construction loan in South Florida
Private construction loans work best for:
- Spec home builders who plan to sell post-completion
- Infill developers working on small-lot projects
- Fix-and-build projects after a teardown
- Non-owner-occupied builds
- Self-employed or non-traditional borrowers
- Permit-ready projects needing fast capital
They’re also ideal when timing is critical, such as beating a zoning deadline, locking in labor rates, or buying land before a competing bid closes.
Typical borrower profile for Marquee Funding Group:
- Business entities (LLCs and corporations)
- Has at least 3 completed projects
- Needs a loan amount from $750K to $5M
- A developer building at scale
When to use a bank construction loan
A bank loan may be the right choice if:
- You’re building a primary residence and intend to live there
- You have strong credit, W-2 income, and a low debt-to-income ratio
- You aren’t in a rush and can wait 30–60 days to close
- You’re focused on long-term financing and prefer lower rates
Keep in mind that bank construction loans often require a longer application process, multiple approvals, third-party inspections, and strict draw control.
Pros and cons of private construction financing
Pros:
- Fast closings
- Minimal documentation
- Custom deal terms
- Creative structures for spec or multi-unit projects
- Available for the land you already own
Cons:
- Higher interest rates (typically 9%–12%)
- Shorter loan terms (6–18 months)
- Lower LTC compared to banks
Private lenders generally trade lower interest rates for agility, offering value through speed and reduced red tape.
How private construction loans work in South Florida
Most private loans follow this structure:
| Loan Component | Description |
| Term length | 6–18 months, interest-only |
| Loan-to-cost | 65%–75% based on total budget |
| Disbursement | Draw schedule based on build milestones |
| Equity requirement | 25%–35%, often covered by land equity |
| Exit strategy | Sale of property or refinance into a long-term mortgage |
If you already own the lot, your equity can reduce or eliminate the cash needed at closing.
Documentation differences: Private vs bank loans
| Document | Required for Bank Loan | Required for Private Loan |
| Two years tax returns | Yes | No |
| W-2 or pay stubs | Yes | No |
| Personal financial statement | Yes | Sometimes (varies by lender and deal) |
| Project budget and plans | Yes | Yes |
| Contractor resume | Yes | Yes |
| Title and site control | Yes | Yes |
Private lenders care more about the deal than the borrower. Banks care more about the borrower.
Choose the loan that matches your project, not just your profile
South Florida residential developers face a fast-paced, competitive market. Choosing between a bank and a private construction loan depends on your timeline, financial documentation, and type of project.
- If you need to fund quickly, avoid income verification, or build spec homes, private construction financing offers significant advantages.
- If you’re building a personal residence and qualify for traditional underwriting, a bank loan may offer lower long-term costs.
Marquee Funding Group construction loans are exclusively for business entities (LLCs and corporations) with at least 3 completed projects. Typical loan amounts range from $750K to $5M, ideal for experienced developers building at scale.
Want to discuss your residential development project and see what your construction loan structure looks like? Speak with Marquee Funding Group today.
Frequently asked questions: Private vs bank construction loans
Private construction loans are generally much faster. You can often fund within 5–10 business days with the right documents.
Yes. Many developers use land equity as their down payment or contribution to meet the lender’s LTC limits.
Private loans have higher interest rates but offer faster funding and fewer hurdles. The speed and opportunity often outweigh the cost.
Absolutely. Private lenders frequently finance spec builds with the expectation that the developer will sell or refinance at completion.
No. While credit is reviewed, approval is primarily based on the deal, project, and equity, not just FICO score.