Specialty & Non-QM Construction Lenders in California

Hard money, non-QM, and specialty lenders for non-standard situations.

By Shane BoothResearched 2026-04-08high confidence

Of the 10 non-QM lenders researched, only 5 actively offer residential construction loan products in California: Lima One Capital, Kiavi, RCN Capital, Pacific Private Money, and Deephaven (via sister company Anchor Loans). All five are business-purpose/non-owner-occupied only—none serve owner-builder or owner-occupied construction scenarios. Angel Oak, Acra Lending, NewFi, A&D Mortgage, and Visio Lending offer permanent non-QM products (bank statement, DSCR) but no construction loans, making them valuable as takeout/refinance lenders post-construction. The California hard money construction market averages 10.20% rates with 2-3 origination points (Q4 2025 Lightning Docs data from 1,572 loans). Non-QM construction rates run 75-150 bps above conventional; hard money runs 200-400+ bps above non-QM. Key California regulatory distinction: CFL-licensed lenders face no construction loan restrictions, while DRE-broker-regulated lenders are subject to BPC §10232.3 caps ($2.5M max, mandatory neutral escrow, independent draw inspections). AB 3108 (effective Jan 1, 2025) makes mischaracterizing consumer loans as business-purpose a felony. The logical escalation when conventional declines is: (1) try another conventional specialist or FHA/VA/USDA, (2) non-QM with bank statement or DSCR qualification, (3) private/bridge lender, (4) hard money as last resort. A project becomes truly unbankable when no viable exit strategy exists, environmental contamination has no remediation plan, or total project cost exceeds after-completion value.

Key Facts

Decision Rules

If: Borrower is self-employed with non-traditional income documentation (no W-2s, writes off heavily on tax returns)

Then: Route to non-QM bank statement program (12-24 month statements) for permanent financing. For construction phase, use private money lender (Lima One, Kiavi, Pacific Private Money) then refinance into bank statement permanent loan (Angel Oak, Acra, A&D Mortgage, NewFi).

If: Borrower wants to be their own general contractor (owner-builder) on a primary residence

Then: Conventional lenders will almost universally decline. Very few non-QM lenders accept owner-builders. North Coast Financial (CA hard money) does owner-occupied. Require minimum 30-50% down payment, credit score 675+, and detailed construction budget/timeline. Consider whether borrower has a GC license—if yes, some conventional programs reopen.

If: Borrower is a real estate investor building non-owner-occupied residential for flip or rental

Then: Route directly to private/hard money construction lenders: Lima One (up to 85% LTC, Build2Rent single-close), Kiavi (up to 90% LTC, no income verification, 24-month term), Genesis Capital (construction specialist), LendingOne (up to 85% LTC). Then refinance to DSCR permanent loan (Visio, Angel Oak, Deephaven, A&D Mortgage).

If: Borrower is a foreign national without US credit history

Then: For construction: Lima One Capital (explicitly accepts foreign nationals for construction), Pacific Private Money (accepts foreign nationals, LLCs, trusts, corporations). For permanent takeout: Acra Lending (ITIN/foreign national), A&D Mortgage (ITIN/foreign national DSCR), Deephaven (foreign national program). RCN Capital does NOT accept foreign nationals.

If: Construction project is in a rural or agricultural zone

Then: First try USDA Construction Loan (100% financing for eligible rural areas). If ineligible, most private/hard money lenders focus on urban/suburban infill only. Pacific Private Money and North Coast Financial (CA-only) may consider on case-by-case basis. Expect higher rates (11-14%) and lower LTV (55-65%) for rural properties due to marketability risk.

If: Borrower needs construction loan above $2.5M

Then: DRE-broker-regulated lenders are capped at $2.5M per BPC §10232.3. Route to CFL-licensed lenders which have no cap: Pacific Private Money (up to $20M), Anchor Loans (up to $20M), Genesis Capital (up to $10M+), Lima One (negotiable for large deals—$23.8M verified). Also consider Ready Capital (institutional, formerly Broadmark) for $5M+ projects.

If: Borrower needs the fastest possible construction loan closing (under 7 days)

Then: Route to hard money: Easy Street Capital (48-hour close), Anchor Loans (3-5 days), Kiavi (5-7 days), Pacific Private Money (72 hours to 7 days), North Coast Financial (5 days for investment property). Expect to pay premium rates (10-14%) and higher points (2-4) for speed.

If: Borrower has credit score below 620

Then: Conventional and most non-QM options are eliminated. Route to hard money: hard money lenders focus on property equity and exit strategy, not credit. North Coast Financial has no stated minimum FICO. Anchor Loans, Pacific Private Money evaluate case-by-case. Expect 11-14% rates and maximum 60-65% LTV. Borrower must have substantial equity (35-40%+ down) and clear exit strategy.

If: Borrower wants to close construction loan in an LLC or trust entity

Then: Conventional/agency loans require individual borrowers. Route to: LendSure (explicitly allows LLC/entity construction), Pacific Private Money (LLCs, trusts, corporations accepted), Lima One (LLC acceptable for business purpose), Kiavi (entity closing standard for investment). All business-purpose entity loans are exempt from TRID disclosure requirements.

If: Construction project is an ADU (Accessory Dwelling Unit)

Then: No researched lender specifically advertises ADU construction loan products. ADU construction would fall under general ground-up programs if it meets minimum loan size ($75K-$150K minimum) and property type requirements. Best options: Kiavi (infill construction), Lima One (ground-up), Pacific Private Money (flexible on property types). Some renovation programs may cover ADU additions to existing properties.

If: Borrower is choosing between one-time-close (single-close) and two-close construction loan

Then: Single-close saves on second set of closing costs ($5K-$15K savings), locks in permanent rate, and avoids requalification risk. But single-close limits lender options (fewer lenders offer it). Two-close gives flexibility to shop permanent rates at completion. For non-QM: GO Mortgage offers single-close non-QM construction. For hard money: Genesis Capital offers one-time-close construction-to-rental. Lima One Build2Rent is single-close construction-to-30yr.

If: Lender charges more than 5 origination points or rates exceed 14% in California

Then: This is a RED FLAG. Verify lender is licensed (CFL or DRE). Check if loan qualifies as a 'covered loan' under Cal. Fin. Code §4970 (APR exceeds Treasury rate by 8+ points or fees exceed 6% of loan amount—triggers additional consumer protections). If lender is unlicensed, rates above 10% violate California usury law. File complaint with DFPI.

If: Borrower has a viable project but has been declined by conventional, non-QM, and hard money

Then: Project may be approaching unbankable status. Before giving up: (1) verify if the denial is fixable (incomplete plans, wrong property type, missing permits), (2) bring in an equity partner to reduce LTV, (3) get contractor pre-qualified by lender before reapplying, (4) consider seller financing for land with construction loan for vertical build only, (5) approach family office lenders (SDC Capital, Karpe Real Estate Center) for relationship-based underwriting.

California-Specific

  • California CFL-licensed lenders have NO construction loan restrictions—no loan cap, no LTV limits, no incremental funding prohibition. DRE-broker-regulated lenders face BPC §10232.3 restrictions: $2.5M max, full funding to escrow, neutral escrow agent, independent draw inspections by licensed architect/contractor/engineer.
  • AB 3108 (effective January 1, 2025) makes it a felony for mortgage brokers to deliberately cause borrowers to sign business-purpose loan documents when proceeds are for personal use. Directly impacts hard money construction lending where business-purpose classification is used to avoid consumer protections.
  • California usury cap is 10% for consumer loans (CA Constitution Art. XV §1). Licensed CFL lenders are fully exempt (Fin. Code §22002). Loans 'made or arranged' by DRE-licensed brokers secured by real property are exempt (Civ. Code §1916.1). Unlicensed private lenders MUST stay under 10% APR including fees, or work through a licensed broker.
  • Mechanics liens in California can prime a construction deed of trust if work commenced before the deed was recorded (Civ. Code §8450). Lenders require ALTA 32 series construction endorsements and date-down endorsements at each draw.
  • California requires use of four specific statutory lien waiver forms (Civ. Code §§8132-8138). Contractors cannot waive lien rights in their contract before work begins.
  • DFPI (Department of Financial Protection and Innovation, formerly DBO) has expanded enforcement powers under the California Consumer Financial Protection Law (CCFPL, effective January 1, 2021) modeled after the CFPB.
  • DRE license lookup: https://pplinfo2.dre.ca.gov/ — DFPI license lookup: https://portal.dfpi.ca.gov/csp?id=ssp_license_search — NMLS Consumer Access: https://nmlsconsumeraccess.org/
  • Filing a Notice of Completion shortens mechanics lien exposure: general contractor deadline drops from 90 to 60 days, subcontractors/suppliers from 90 to 30 days. Lenders strongly encourage owners to file this.
  • California 'covered loan' protections (Fin. Code §4970 et seq.) trigger when APR exceeds Treasury rate by 8+ points or total points/fees exceed 6% of loan amount for consumer loans secured by 1-4 unit borrower-occupied dwelling.
  • CEQA (California Environmental Quality Act) can significantly delay construction timelines and affect loan disbursement schedules. Hard money/private lenders may have less stringent environmental requirements but retain environmental liability exposure.
  • 2025 California conforming loan limits are $766,550 (standard) and higher in high-cost counties. Borrowers above these limits with non-traditional income are pushed to non-QM or portfolio jumbo products.
  • Stop payment notices: unpaid subcontractors can serve notice on the construction lender requiring withholding of funds from the direct contractor (Civ. Code §§9350-9364). A bonded stop payment notice always requires withholding.

Common Misconceptions

Non-QM lenders offer construction loans with bank statement or DSCR qualification

The major non-QM lenders (Angel Oak, Acra, A&D Mortgage, Visio, NewFi) offer bank statement and DSCR products only for PERMANENT financing. Their construction products, when they exist, are typically asset-based/hard money with separate underwriting. The typical pathway is: use a private/hard money lender for the construction phase, then refinance into a permanent non-QM bank statement or DSCR product upon completion.

Hard money construction loans are predatory and should always be avoided

Hard money fills a legitimate market need for speed, flexibility, and credit situations that conventional lenders cannot serve. California's hard money market is highly competitive with average rates around 10.20% (Q4 2025). Established lenders like Anchor Loans ($10.8B funded), North Coast Financial (40+ years), and Genesis Capital (construction specialist of the year) operate with transparent terms. The key is verifying licensing (CFL or DRE), understanding total costs, and having a viable exit strategy.

Any private individual can lend at any interest rate in California

Unlicensed private lenders in California are subject to the constitutional 10% usury cap (Art. XV §1) including all fees. To charge above 10%, the lender must either hold a CFL license from DFPI (fully exempt) or have the loan 'made or arranged' by a licensed DRE broker (exempt under Civ. Code §1916.1). Penalties for usury violations include forfeiture of ALL interest, triple damages, and criminal charges.

Owner-builders can easily get non-QM or hard money construction loans

Nearly all non-QM and hard money construction lenders require a licensed general contractor and reject true owner-builders. Of the 16 construction lenders researched, only North Coast Financial explicitly offers owner-occupied hard money that could accommodate an owner-builder scenario, subject to federal consumer protection regulations. Owner-builders typically need 30-50% down payment, credit scores of 675+, and detailed construction documentation.

All hard money and non-QM construction loans require TRID disclosures

TRID (TILA-RESPA Integrated Disclosure) applies only to consumer-purpose loans (personal, family, household). Business-purpose loans—which is what most hard money and private construction loans are classified as—are generally NOT covered by TRID. However, if a hard money construction loan is for the borrower's primary residence, TRID likely applies. AB 3108 (2025) makes it a felony to misclassify consumer loans as business-purpose to avoid these protections.

Hard money lenders will fund any project as long as there is equity

Even hard money lenders decline projects when: no viable exit strategy exists, environmental contamination has no remediation plan, zoning violations cannot be resolved, no permits are obtainable, total project cost exceeds after-completion value, property has unresolvable title issues, or the location has no comparable sales. A project becomes truly 'unbankable' at this point.

Points and fees on hard money construction loans are a fixed one-time cost

The true cost compounds: origination points (2-5% of loan amount), draw inspection fees ($150-$500 per draw × 5-8 draws = $1,500-$4,000), title date-down endorsements ($200-$500 per draw), extension fees (0.5-2 points if construction runs over schedule), and interest-only payments on drawn funds. A $500K hard money loan at 11% with 3 points, 6 draws, and one extension could easily add $30,000-$50,000 in total fees and interest over 18 months beyond the principal.

DRE-licensed and CFL-licensed lenders have the same authority for construction loans

They differ dramatically for construction lending. CFL licensees have NO construction loan restrictions—no cap on loan size, no LTV limits, no incremental funding prohibition. DRE-broker-regulated lenders are subject to BPC §10232.3: $2.5M maximum loan amount, full funding to escrow before deed recording, neutral escrow agent required, independent draw inspections by licensed professionals. Most large private construction lenders operate under CFL specifically for this reason.

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