What Is a Build-to-Rent Loan?
A build-to-rent (BTR) loan finances the construction of residential properties built from the ground up with the intent to hold and rent — not sell. Unlike traditional construction loans that expect you to sell or convert to a standard mortgage, BTR loans are structured for investors who want to build new rental inventory. The construction phase transitions directly to permanent rental financing, often a DSCR loan.
BTR is one of the fastest-growing segments in real estate. The financing is now available to individual investors building single-family rentals, duplexes, and small multifamily buildings.
Why build new: New construction means lower maintenance costs, higher rents, longer tenant retention, and better energy efficiency. A purpose-built rental can be designed for optimal cash flow from day one.
Who Build-to-Rent Is For
- Investors building single-family rentals in growth markets
- Developers building small BTR communities (5-50+ units)
- Portfolio builders who want new, low-maintenance rental inventory
- Investors in markets where buying existing inventory is too competitive
Key Features
Construction phase: 12-18 months, interest-only, draw-based funding. Permanent phase: DSCR or portfolio loan, 30-year term. Down payments from 15-25% of total project cost. Credit scores from 680+. Some programs cover land acquisition plus construction in one loan.