Ground-up construction can be one of the most rewarding strategies in real estate investing. Whether you’re building to sell or creating long-term rental inventory, new homes allow investors to design modern layouts, incorporate energy-efficient systems, and capture higher ARVs than most renovation projects. But before construction starts, every project—no matter the market—begins with one essential step: permits.
Understanding Permits
Understanding how the permitting process works, which approvals you’ll need, how long it takes, and how it affects financing is one of the most essential skills for any investor entering the new build space. The better prepared you are on permitting, the smoother your build will go.
At FACo, we specialize in helping investors navigate this process from start to finish. We know permitting can create uncertainty, especially for new builders—which is why FACo allows investors to secure Ground-Up Construction funding even before permits are issued. Once permits are approved, we can provide up to 15% additional LTC in catch-up draws, ensuring your project is capitalized correctly from the start.
Below is a high-level guide to the permitting process, what each permit covers, and how investors can position their projects for faster approvals and smoother execution.
Why Permits Matter in New Construction
Permits are more than paperwork—they’re a legal authorization to build. They protect your investment by ensuring the project complies with:
- Local building codes
- Zoning and land-use regulations
- Safety and fire standards
- Environmental rules
- Utility requirements
- Structural engineering guidelines
Without proper permits, investors risk several holdbacks including: stop-work orders, fines, inspection delays, difficulty obtaining insurance, or issues with financing or selling the completed property.
Permits ensure that, upon completion, your property is safe, code-compliant, and fully financeable. They are a foundational element of a successful build.
Key Permits Required for Residential New Builds
While requirements vary by city and county, most new build projects require several core permits. Understanding them early will help investors plan more effectively.
1. Zoning & Land-Use Approval
Before you can apply for a building permit, you must confirm that the land is legally allowed for residential construction. Zoning determines:
- Whether housing is permitted
- The type of residential structures allowed (SFR, 2–4 units, etc.)
- Minimum lot size
- Maximum building height
- Setback distances
- Parking or access requirements
If your intended use doesn’t match zoning, you may need a zoning variance, rezoning request, or special use permit.
These additional steps can significantly extend timelines, so verifying zoning upfront is essential.
2. Building Permit (Core Construction Authorization)
This is the primary permit required for new construction. The application typically includes:
- Architectural plans
- Structural engineering drawings
- Site and grading plans
- Foundation details
- Materials specifications
- Roofing and framing information
The building department uses this permit to verify the home will be structurally sound and code-compliant.
3. Mechanical, Electrical, & Plumbing (MEP) Permits
Some jurisdictions include these within the building permit, while others require separate filings. These permits cover all critical systems:
- HVAC design and ducting
- Electrical panels, circuits, and wiring
- Plumbing supply and drainage
- Gas lines where applicable
These items will receive multiple inspections during construction.
4. Grading, Soil, and Foundation Permits
Depending on the lot and preparation required, you may need approvals for:
- Excavation
- Soil testing
- Drainage systems
- Retaining walls
- Slope stabilization
These permits ensure the land can structurally support the proposed build.
5. Utility Connection Permits
One of the biggest differentiators between an easy build and a challenging one is access to utilities. Developed suburban lots are often ready for hookups, while rural properties may require significant infrastructure. Due to the high upfront costs of installing utility access, most lenders prefer to finance properties with easy access to them.
As such, you may need approvals for:
- Water and sewer connections (or septic permits)
- Electrical service
- Natural gas lines
- Stormwater management
- Fiber or telecommunication access
FACo generally recommends that new builders stick to build-ready lots with existing utility infrastructure, as these projects tend to move more quickly and carry less risk.
6. Environmental or Specialty Permits (When Required)
Certain areas—coastal, mountain, or environmentally sensitive zones—may require additional review:
- Floodplain development permits
- Environmental impact studies
- Coastal development approvals
- Tree removal permits
- Historic district restrictions
Understanding these early helps investors avoid unexpected delays.
FACo Can Fund Before Permits Are Issued—A Key Advantage for Investors
Many lenders won’t release construction financing until permits are approved. FACo takes a different approach.
FACo allows Ground-Up Construction funding even before permits are issued. This gives investors several advantages:
- Lock in desirable land before competition
- Begin architectural planning early
- Move forward on zoning checks
- Start the permit application process without delaying financing
- Prepare for a faster construction timeline
Once permits are fully approved, FACo provides up to 15% additional LTC through catch-up draws, ensuring the project remains properly funded through its initial phases.
This flexibility is a significant benefit for builders entering competitive markets where timing matters.
The Permit Process Step-by-Step
While every city is unique, most permitting workflows follow a general structure. Investors who understand each step in advance can significantly streamline the process.
Step 1: Verify Zoning & Feasibility
Before committing to architectural plans or a purchase contract, confirm:
- Residential use is allowed
- Lot setbacks and easements are workable
- Utilities are available
- No unusual environmental restrictions exist
- HOA or subdivision rules allow your proposed design
This step ensures the lot is a good candidate for financing and construction.
Step 2: Prepare Architectural & Engineering Plans
To submit for a building permit, you will need:
- Floor plans
- Elevation drawings
- Structural engineering
- Foundation plans
- Electrical and plumbing schematics
- Site layout and grading plans
Most jurisdictions require licensed professionals to prepare these documents. Incomplete or inaccurate plans are a primary cause of permit delays.
Step 3: Submit Permit Application
A permit package often includes:
- Completed application
- Finalized plans
- Scope of Work (SOW)
- Contractor licenses and insurance
- Site surveys or soil reports
- Permit fees (typically $750–$2,500+)
Processing times vary widely—anywhere from 1–12+ weeks depending on the region.
Step 4: Plan Review & Corrections
During review, city officials will:
- Check compliance with building codes
- Ensure proper engineering
- Confirm zoning alignment
- Review MEP systems
Receiving correction notices is common. Quick responses help keep the project moving.
Step 5: Permit Issuance
Once approved, you receive:
- Permit placards
- Approved plans
- Required inspection checkpoints
Only after this step can full construction begin—and this is when FACo’s additional LTC catch-up draws become available.
Step 6: Required Inspections Throughout Construction
Most cities require inspections at multiple phases, such as:
- Footing and foundation
- Framing
- Rough-in plumbing, electrical, and HVAC
- Insulation
- Drywall
- Final inspection
Passing final inspection leads to the issuance of the Certificate of Occupancy (CO), which confirms the home is legally habitable and ready for sale or rental.
Why Build-Ready Locations Matter for Investors
While rural or off-grid parcels may appear inexpensive, they often come with:
- Extended permitting timelines
- Expensive utility installations
- Limited resale or rental demand
- Additional engineering requirements
- Higher carrying costs due to delays
FACo encourages clients—especially newer builders—to focus on:
- Suburban neighborhoods
- Infill lots
- Growing metro-adjacent communities
- Areas with existing utility infrastructure
These locations typically provide:
- Faster approvals
- Greater design consistency
- Stronger resale values
- Lower engineering risk
- Smoother drawing processes
Choosing the right lot often matters just as much as choosing the right contractor or lender.
FACo: Your Partner From Permits to Completion
Navigating permits can be complex, but you don’t have to do it alone. FACo’s Ground-Up Construction financing is designed with investors in mind, offering:
- Flexible 12–24-month terms
- Funding available even before permits are issued
- Up to 100% of construction costs
- Up to 15% additional LTC once permits are approved
- Fast, common-sense underwriting
- Support in 44 states
Whether you’re building your first home or scaling a multi-project pipeline, FACo is here to help you move with confidence from land acquisition to completion.
If you’re ready to start your next build or want help evaluating a new lot, reach out to FACo today. Our team is here to guide you through financing options and support your investment goals at every step.
