How do Scottsdale construction loan draws work?

Construction draws are milestone-based — typically 4 to 6 disbursements tied to project completion checkpoints like foundation pour, framing, rough mechanicals, drywall, and final. Grand Funding verifies each milestone before releasing the next draw.

Can I use a construction loan for an ADU in Scottsdale?

Yes. Accessory dwelling units are an approved use case for construction loans. Scottsdale and surrounding cities have streamlined ADU permitting, making these deals attractive. We fund ADU construction from $250,000 and up.

Do I need permits before getting a construction loan in Scottsdale?

You need approved plans and a building permit pulled before we release the first draw. We can fund loan closing while permits are in process, but ground cannot break — and the first draw won't release — until the permit is issued.

What is the maximum LTC for a Scottsdale construction loan?

Grand Funding lends up to 80% of total project cost (land + construction budget) for Scottsdale new construction. That means you're bringing 20% to the table. Maximum loan amount is $5 million.

Scottsdale Construction Loans: Build Guide for AZ Investors

Scottsdale is one of the most active new-construction markets in the country. Teardown-rebuilds in Old Town, custom luxury estates in North Scottsdale, spec homes in McCormick Ranch, and ADUs in Paradise Valley — the building activity is constant. This guide explains how Scottsdale construction loans work, what lenders actually look at, and how to structure a deal that closes fast.

Why Scottsdale Construction Financing Is Different From Phoenix

Scottsdale deals skew larger and more custom. You're frequently looking at $1M–$5M projects with architectural drawings, high-end finishes, and extended build timelines. That changes how lenders underwrite the deal:

Higher project costs — $300–$600 per square foot on luxury builds versus $180–$280 for standard Phoenix construction
Longer timelines — 12 to 18 months typical versus 8 to 12 months for production builds
Stricter permit review — Scottsdale's design review process adds time; lenders price that in
Stronger exit values — Scottsdale luxury market comps support higher post-construction appraised values, which means more room on LTV

Grand Funding lends up to 80% of total project cost on Scottsdale construction, with loans from $250,000 to $5 million and terms of 12 to 18 months.

The Four Most Common Scottsdale Construction Loan Use Cases

1. Teardown-Rebuild on Established Lots

Old Town Scottsdale, Arcadia, and South Scottsdale have significant teardown inventory — older homes on premium lots where the land value exceeds the structure. Investors buy, demo, and build new. The construction loan funds the acquisition and build simultaneously, with the land purchase rolled in at closing and construction draws released as milestones hit.

2. Custom Spec Homes in North Scottsdale

North Scottsdale — Troon, Desert Highlands, Silverleaf, DC Ranch — is spec home territory for experienced builders. These projects run $2M–$5M+. A construction loan sized at 80% of project cost means you're putting in $400K–$1M in equity while we fund the rest through the draw schedule.

3. ADU Additions in Paradise Valley and Scottsdale

Arizona relaxed ADU permitting statewide, and Scottsdale followed. Adding a detached ADU to an existing property adds significant ARV while creating a rentable unit. We fund ADU-only construction loans when the total loan fits within 80% of the post-completion value.

4. Infill Development and Multi-Unit

Scottsdale's urban core — near Fashion Square, Old Town, and the entertainment district — has infill opportunities for 2–8 unit projects. We fund small multi-family construction the same way we fund single-family: draw-based, asset-secured, and based on completed project value.

How Scottsdale Construction Loan Draws Work

Unlike a purchase loan that funds once, construction loans fund in stages. Here's the typical draw schedule:

Draw 1 (Foundation): Released when foundation is poured and inspected. Usually 15–20% of construction budget.
Draw 2 (Framing): Released when frame is complete and inspected. Another 20–25% of budget.
Draw 3 (Rough Mechanicals): Electrical, plumbing, and HVAC roughed in. 15–20%.
Draw 4 (Drywall + Exterior): Interior drywall and exterior skin complete. 15–20%.
Draw 5 (Completion): Certificate of Occupancy issued, punch list done. Remaining balance.

We require a third-party inspection before releasing each draw. The inspection costs $300–$500 and takes 24–48 hours — it protects both sides. Budget for this in your project timeline.

What Scottsdale Construction Lenders Actually Look At

Hard money construction underwriting is asset-based, but Scottsdale deals require more than just "good land." Here's what we review:

Approved plans and permits — City-approved architectural drawings and building permit pulled (or in process) before first draw
Contractor license and insurance — Licensed GC with ROC registration in Arizona and $1M general liability minimum
Detailed construction budget — Line-item breakdown with contingency. Scottsdale luxury projects should budget 10–15% contingency
Total project cost vs. ARV — We want to see the completed value comfortably above the loan amount. Scottsdale comps support this well
Your experience track record — First-time builders can qualify with an experienced GC; seasoned builders get more flexibility on terms

Scottsdale Construction Loan Timeline: What to Expect

From first call to funded loan:

Day 1: Submit deal basics — address, plans, construction budget, GC name, exit strategy
Day 1–2: We review and issue a term sheet with rate, loan amount, draw schedule
Day 2–3: You accept, title company engaged, preliminary title ordered
Day 3–5: Appraisal ordered (or BPO on smaller deals), docs drawn
Day 5–10: Loan closes. First draw can release once permits confirmed

Scottsdale deals often take 7–10 days rather than 3–5 because of appraisal timelines on luxury product. If you have a pending lot and a full plan set ready, tell us up front — we can accelerate.

Costs Borrowers Frequently Underestimate in Scottsdale

Scottsdale construction projects have cost categories that Phoenix investors sometimes miss:

Design review fees: Scottsdale's Architectural Review Committee adds 4–8 weeks and fees for projects in certain districts
Premium finishes: Buyers in North Scottsdale expect Sub-Zero/Wolf appliances, porcelain tile throughout, and smart-home systems. Under-budget here and you under-sell
Landscaping: Desert landscaping with mature plants, putting green, pool, and hardscape can run $150K–$400K on luxury builds — often underfunded
Carrying costs: Interest on a $2M construction loan at 10.99% runs ~$18,000/month. At 14 months average timeline, that's $252,000 in interest alone

Build all of these into your proforma before you close. Surprises at draw 4 are not a position you want to be in.

Scottsdale vs. Phoenix Construction Loans: Key Differences

Minimum loan size: We fund $250K on Scottsdale builds (same as Phoenix)
Rate: Same rate structure — pricing is deal-based, not location-based
Timeline: Scottsdale luxury projects often run 14–18 months vs. 10–12 months on standard Phoenix builds
Exit: Strong luxury buyer demand in Scottsdale supports faster absorption than comparable build costs in other Valley cities

What to Bring to Your First Conversation With Us

Property address (or target neighborhood)
Plans and permit status (approved, in review, or being drawn)
Contractor name and license number (ROC#)
Line-item construction budget
Your estimate of completed value with 3 comps if you have them
Your target close date and construction timeline

That's enough for us to give you a term sheet. No tax returns. No income verification. Asset-based means the project is the application.

Scottsdale Construction Loans: Build New, Tear Down, or Expand in the Luxury Market