In 2026, California construction rates run about 7.5–9% (custom C2P, ≈1–2 pts over conventional) and 8–13% (developer: banks 8–10% at SOFR+250–400bps, debt funds 10–13%, SBA 504 up to 90% LTC at ~7–9%). FHA C2P ~5–7%; VA construction flexible; owner-builder ~6–10%. C2P converts to standard perm pricing at completion. Model carry in the calculator.
2026 California rate ranges
| Program | Typical rate* | Notes |
|---|---|---|
| Custom home — conventional C2P | ~7.5–9% | ≈1–2 pts over conventional |
| FHA construction-to-permanent | ~5–7% | Eligible borrowers |
| VA construction | Flexible | Eligible veterans, $0-down options |
| Owner-builder | ~6–10% | Higher scrutiny |
| Developer — bank | ~8–10% | SOFR + 250–400bps, 65–75% LTC |
| Developer — debt fund | ~10–13% | Higher leverage 75–85% LTC |
| SBA 504 (owner-occ) | ~7–9% | Up to 90% LTC |
*Illustrative for 2026; not an offer. Bank developer loans float on SOFR (recently ~3.8%) plus a spread. Model total carry →
What sets your rate
Leverage (LTC) — the biggest developer lever
Lower loan-to-cost = lower rate. 65% prices well below 85%.
Lender type
Banks cheapest, debt funds pricier for speed/leverage, SBA best for owner-occupiers.
Credit (custom homes)
720+ earns the best custom pricing; 680 is a common floor.
Builder & plans
A vetted builder + complete plans + fixed-price contract lower risk and rate.
The takeout
A proven exit — strong DSCR or pre-leasing — improves developer pricing.
Market (SOFR)
Bank floaters move with SOFR; the Fed's stance flows through.
Bank vs debt fund vs SBA
Bank
- Cheapest (~8–10%)
- Lower leverage (65–75% LTC)
- Wants track record + pre-leasing
Debt fund
- Pricier (~10–13%)
- Higher leverage (75–85%+)
- Faster, less-proven sponsors OK
Owner-occupiers should also weigh SBA 504 — up to 90% LTC at ~7–9%.
How to price better
| Lever | Effect on your rate |
|---|---|
| Bring more equity (lower LTC) | Biggest developer reduction |
| Strengthen credit (custom) | Lower rate |
| Use a vetted builder + fixed-price | Lower risk premium |
| Show a proven takeout / pre-leasing | Better developer terms |
| Match the right lender type | Bank vs fund vs SBA |
| Shop multiple construction lenders | Real spread in quotes |
Reviewed by the licensing team at Save Financial, a California-licensed mortgage brokerage (NMLS #377740, DRE #01875766) founded in 2009 and serving all 58 counties from offices in Newport Beach and Marina del Rey. Last reviewed July 2, 2026.