Capital Kings LLC · Broker, not a lender

New Construction Loans
in Alabama

Lot plus vertical construction on one loan for Alabama spec builds, single family through small multifamily. First-time builders are welcome with an experienced GC on the job. It’s interest-only for 12-18 months, and draw money comes out as each stage passes inspection. Building in Birmingham, Huntsville, Mobile and statewide.

By Micah FosterProgram terms verified October 2026

Prefer to talk it through? Call or text Micah at (281) 636-5682.

MontgomeryState capitalThe Yellowhammer StateState nickname

What are new construction loan terms in Alabama right now?

These are the terms on the programs we are quoting right now. Your actual terms depend on the property, your credit and your experience, and the term sheet shows the real numbers before you commit.

Of total cost, first build: 85%
Of total cost after one build: 85%
Of completed value: 65-75%
Rates from (5+ builds): 8.49%
Minimum credit (680+ with an interest reserve): 650+
Interest-only term: 12-18 mo

Alabama new construction terms as of October 2026

These use the same math as our term sheets. Final terms depend on the property, your credit and experience, and what the lender approves. Read the full new construction guide for how the program works deal by deal.

Ground-up single family to small multifamily, 12-18 month interest-only terms, lot and vertical funded together. First-time builders qualify at 650+ credit on Lower Fees (680+ on the Financed Interest Reserve) with a general contractor who has 5+ completed builds. Pick the structure that fits your cash:

A spec build in Birmingham, priced on the term sheet

$60,000 lot$120,000 build$240,000 completed value720 credit

As of October 2026	First build with a GCLower Fees	After one completed buildFinanced Interest Reserve
Loan to cost (LTC)	85%	95% with the interest reserve
Completed value (LTARV)	65%	75%
Rate	12.24%	9.50%
Points	2% + $1,995 lender fees	3% + $3,490 lender fees
Term	12-18 mo, interest-only	12-18 mo, interest-only
Construction draws	Draws; interest paid monthly	Draws; interest from the reserve
Minimum credit	650+	680+
Cash needed on the example	$38,763 to start, $66,127 proof of funds	$33,382 to start, $33,382 proof of funds

First build with a GC, Lower Fees

12.24% · 2% origination · 650+ credit

Lender $153,000You $27,000

Loan: $153,000
Lot advance at closing: $33,000
Build budget paid in draws: $120,000
Your lot down payment: $27,000
Origination, broker and lender fees: $7,055
Title, insurance, appraisal, prepaid interest: $4,708
Cash to close: $38,763
Proof of funds the lender checks: $66,127

After one completed build, Financed Interest Reserve

9.50% · 3% origination · 680+ credit

Lender $162,000You $18,000

Loan, interest reserve included: $170,079
Lot advance at closing: $42,000
Build budget paid in draws: $120,000
Interest reserve in the loan: $8,079
Your lot down payment: $18,000
Origination, broker and lender fees: $10,592
Title, insurance, appraisal, prepaid interest: $4,790
Cash to close: $33,382
Proof of funds the lender checks: $33,382

Capital Kings new construction term sheet for an Alabama spec build: $60,000 lot, $120,000 build, $38,763 cash to close — The term sheet for the first build: **$60,000** lot, **$120,000** build, 720 credit, **$38,763** cash to close on Lower Fees.

85% of cost is not 15% cash. On the first build the loan covers $153,000 of the $180,000 project, and you still bring $38,763 to closing (the lot down payment plus fees, title, insurance, appraisal and prepaid interest). Before it closes, the lender checks $66,127 in proof of funds: your cash to close plus a build cushion and about six months of interest. Draws are released after each stage is inspected, so plan to carry the first stage. Figures from the term sheet engine as of October 2026; your sheet prints your real numbers.

Lower Fees or a Financed Interest Reserve, side by side

Lower Fees

Lowest fees. You pay the interest monthly from the first draw.

Financed Interest Reserve

Up to 90% of cost with the reserve. It carries your payments while you build, for higher fees. Needs a GC with 5+ completed builds.

Max loan to cost

85% of total cost

90% of total cost with the interest reserve

Completed-value cap

65% of completed value

70% of completed value

Lot advance

70% of lot cost

70% of lot cost (60% until permits are in)

Rate

12.24%

9.50%

Origination and lender fees

2% origination + $1,995 lender fees

3% origination + $3,490 lender fees

Interest while you build

Paid monthly from the first draw

6 months of interest financed in the loan

Minimum credit

650+

680+

Cash to start on the example

$38,763$66,127 proof of funds

$40,795$40,795 proof of funds

Priced on the term sheet for the $60,000 lot, $120,000 build and $240,000 completed value example at 720 credit, as of October 2026. More leverage costs more: the Financed Interest Reserve carries higher origination plus underwriting and processing fees, so compare the cash to start, not just the rate. Both structures also carry our 1% broker fee ($2,000 minimum).

Every tier, both structures

Lower Fees. About 2 points and no reserve in the loan; you pay the interest monthly from the first draw.

Experience	Max loan	Completed-value cap	Lot advance	Rate	Origination
GC-backed first build	85% of total cost	65% of completed value	70% of lot cost	11.74% at 740+, 12.24% under 740	2%
1-4 builds	85% of total cost	70% of completed value	75% of lot cost	10.49%	2%
5+ builds	90% of total cost	75% of completed value	80% of lot cost	10.50%	2%

Financed Interest Reserve. Your first months of interest are financed as part of the loan rather than paid out of pocket: the loan carries an interest reserve of six months of fully drawn interest, so your payments are covered while you build, up to 95% of cost with the reserve counted. $1,995 underwriting and $1,495 processing on top of origination, and 60% of the lot until permits are in. This structure needs 680+ credit and liquid funds of about 10% of the build budget plus fees.

Experience	Max loan, reserve included	Completed-value cap	Lot advance	Rate	Origination
GC-backed first build	90% of total cost	70% of completed value	70% of lot cost	9.50%	3%
1-4 builds	95% of total cost	75% of completed value	70% of lot cost	9.50%	3%
5+ builds	95% of total cost	75% of completed value	75% of lot cost	8.49%	3%

Both structures also carry our 1% broker fee ($2,000 minimum), itemized on the term sheet with every lender fee.

Finished one build in your own LLC? See 95% construction loans with a financed interest reserve: about 90% of the lot and build in cash plus a built-in interest reserve, at 9.50%.

What do you need to apply in Alabama?

Plans and permits (or permit-ready status)
Line-item construction budget from your GC
GC license and references
Lot purchase contract or deed if owned
Two months of bank statements
LLC documents

How long does a new construction loan take in Alabama?

Send the lot cost, build budget, completed value, your credit range and how many builds you have finished. The term sheet shows the lot advance, the construction holdback and your cash to close. Plan on 21-30 days to close once plans, budget and the GC package are in, then each build stage is inspected and its draw is released.

Alabama, city by city

The Alabama markets we fund most. Not on the map? We broker every county in the state, so send the deal and we place it.

Ctrl + scroll or click a crowded spot to zoom, drag to movePinch or tap a crowded spot to zoom, drag to move

What do common deals cost to close?

Each question has its own page with the worked example line by line and the sample term sheet. The figure is the answer on that page.

Questions about loans in Alabama

Do you finance new construction in Alabama for a first-time builder?

Yes, as long as a general contractor with 5+ completed builds builds it. A first build in Alabama comes in at 11.74% with 85% of total project cost financed, capped at 65% of completed value, 650+ credit. After one completed build you have two options: Lower Fees stays at 85% of cost with the rate dropping to 10.49% at 2% origination, or the Financed Interest Reserve goes to about 90% of the lot and build in cash (95% with the interest reserve included) at 9.50%, with 3% origination plus lender fees. 5+ builds get 75% of completed value at 10.50% on Lower Fees, or from 8.49% with the reserve. A GC-backed first build can also take the Financed Interest Reserve at 9.50% with 680+ credit. Both structures add our 1% broker fee ($2,000 minimum).

How much cash do I need to build a spec house in Alabama?

On a $60,000 lot with a $120,000 build and a $240,000 completed value at 720 credit, a first build with a GC on Lower Fees borrows $153,000 at 12.24% and needs about $38,763 to start ($27,000 lot down payment plus closing costs), with $66,127 in proof of funds. After one completed build, the Financed Interest Reserve borrows $170,079 at 9.50% with the reserve included and needs about $33,382 to start, $33,382 proof of funds. Figures from the term sheet engine as of October 2026.

How much of the project cost will the loan cover in Alabama?

85% of total cost (lot plus build plus soft costs) on a first build and after one completed build, 90% at 5+ builds on Lower Fees, or up to 95% of total cost with the interest reserve financed into the loan after one completed build. The loan is also capped at 65% to 75% of the completed appraised value depending on experience, and the lower cap wins.

What if I already own the lot?

Your equity in the lot counts toward the down payment. On many Alabama builds a paid-off lot covers the entire cash requirement except closing costs and the first draw.

What are Alabama construction loan rates?

As of October 2026: 11.74% for gc-backed first build, 10.49% for 1-4 builds, 10.50% for 5+ builds, interest-only, with 2% origination plus our 1% broker fee ($2,000 minimum). Interest is charged on drawn funds with most lenders, so early months cost less. With a financed interest reserve, which makes the payments while you build: 9.50% for gc-backed first build, 9.50% for 1-4 builds, 8.49% for 5+ builds, with 3% origination plus lender fees and the same broker fee, at 680+ credit.

How long is the loan and how fast does it close?

12-18 months interest-only, extensions available for a fee. Plan on 21-30 days to close in Alabama once plans, budget and the GC package are in, since the appraiser has to value the finished home from your plans.

Is Capital Kings a direct construction lender in Alabama?

No. Capital Kings LLC is a broker. We match your Alabama build with the construction lenders in our network that fit your experience tier and price it on one term sheet.

What else do we fund in Alabama?

How do these loans actually work?

These guides use Texas deals for their examples, but the way the loans work, what lenders check and how to compare offers is the same on an Alabama deal.

Next to Alabama, we also lend in Georgia, Tennessee, Mississippi and Florida. See all 38 states we lend in →

Founder & CEO

Micah Foster

Micah worked as a loan officer at a direct hard money lender before he started Capital Kings in Houston, and he now runs it from Colorado Springs. He works with investors in 38 states, compares programs across his lender network and tells you what a deal will really cost before you sign anything.

Connect With Micah →

Ready to fund your Alabama deal?

Text us the deal or send it through the application. We run it past the lenders that fit and send back a term sheet on your actual numbers, no full application needed to get started.

Start Application →Get a Pre-Approval Letter

Capital Kings LLC is a non-QM mortgage brokerage. We are not a direct lender. We take your scenario to direct lenders in our network and help you pick the one that fits. Loans in Alabama are made by partner lenders that lend in Alabama. All loans subject to underwriting approval. Rates, terms, and program availability vary by lender and may change without notice. Hard money and DSCR loans are secured by real estate. Not for primary residences.

New Construction Loansin Alabama