Palo Alto is nearly fully built out, so “new construction” here rarely means an empty lot. It means buying an existing home — often in Old Palo Alto, Crescent Park, Professorville, or Barron Park — demolishing it, and rebuilding on a standard 6,000 to 8,000 square foot parcel. This teardown-rebuild model is the standard path to a genuinely new home in this city, and it comes with a permitting process unlike almost anywhere else in California: the city’s Architectural Review Board or Individual Review process for two-story homes, floor-area-ratio and 35% lot coverage limits, a 30-foot height cap, protection for heritage trees at 15 inches diameter and above, and floodplain considerations in neighborhoods like Crescent Park, where roughly a third of properties carry some flood risk.
Construction costs in Palo Alto run $400 to $800-plus per square foot depending on finish level, with total project budgets, including a teardown lot, commonly reaching $4 million to $8 million or more. Timelines run 18 to 30 months from design to move-in, including 4 to 8 months just for the city’s permit review. Financing a project like this with two separate loans — construction, then a refinance into permanent — adds cost and risk at exactly the wrong points. A One-Time Close structure avoids that.
A One-Time Close Construction loan combines your construction financing and your permanent mortgage into a single closing, structured in three phases:
Construction phase: Funds are disbursed in draws as your teardown-rebuild progresses, timed to your builder's schedule through Palo Alto's Architectural Review and permitting process.
Conversion phase : Once construction is complete and the certificate of occupancy is issued, the loan converts automatically into permanent financing — no second closing, no second round of underwriting or appraisal.
Permanent phase: You begin making standard mortgage payments on the converted loan, at the rate and terms locked in from the start of your project.
Key Features:
Single closing covers both construction and permanent financing
Rate can be locked before demolition begins, reducing exposure to rate movement during Palo Alto's 18-30 month typical build timeline
Draw schedules structured around your specific builder's timeline and the city's phased permit and inspection process
Financing available for the land/teardown purchase and the subsequent rebuild
Eliminates the cost of a second set of closing fees
For teardown-rebuild projects with all-in budgets within or near Santa Clara County’s conforming loan range — an increasingly rare scenario in Palo Alto’s core neighborhoods, but relevant in some of the city’s more modest pockets.
Given that Santa Clara County’s conforming ceiling sits at $1,249,125 and total teardown-rebuild budgets in neighborhoods like Old Palo Alto and Crescent Park commonly reach $4 million to $8 million or more, most Palo Alto construction projects require Jumbo-level One-Time Close financing.
For eligible veterans building in Palo Alto, VA loans carry no county loan limit, which matters given this city’s high construction costs and its connection to the VA Palo Alto Health Care System, an 800-plus bed facility serving more than 67,000 enrolled veterans.
For buyers working with an architect-led design-build firm through Palo Alto’s Individual Review process, with draw schedules built around the specific phased permitting and inspection timeline this city requires.
Old Palo Alto and Crescent Park
The city's most active
teardown-rebuild corridors, where land alone for a teardown candidate typically starts around $2.5 million and can exceed $5 million before construction begins.
Professorville
A designated historic district near Stanford where preservation requirements add another layer of design review to any rebuild project.
Barron Park and Midtown
Neighborhoods where local builders have completed a steady stream of infill teardown-rebuilds and larger-parcel new construction at a somewhat more accessible price point than the flatland estate neighborhoods.
Experience financing teardown-rebuild projects through Palo Alto's Architectural Review Board and Individual Review processes
Jumbo and VA One-Time Close structuring for Palo Alto's high per-square-foot construction costs
Rate-lock strategy built around Palo Alto's 18-30 month typical build timeline
Direct coordination with design-build firms and general contractors on draw schedules
Single point of contact from land purchase through permanent conversion
Ryan Lehrman, NMLS #235295
Credit profile: Generally 700+ credit score, higher for Jumbo-level construction amounts
Down payment or equity: Typically 10-20% for the combined land and construction budget, though VA financing can reduce or eliminate this for eligible veterans
Builder verification: Confirmation of your contractor's license, project plans, and Palo Alto permit status before draws begin
Reserves: Sufficient liquid reserves to cover Palo Alto's extended 18-30 month build timeline, including permit review delays
Initial consultation — We review your teardown or rebuild project, target neighborhood, and total budget, including land, permitting, and construction.
Pre-approval and rate lock — We lock your rate structure before demolition begins, protecting you from rate movement during Palo Alto's extended build timeline.
Draw coordination — I work directly with your builder or design-build firm to structure disbursements against the city's phased permitting and inspection schedule.
Completion and conversion — Once your home receives its certificate of occupancy, the loan converts to permanent financing with no second closing.
Permanent phase begins — You move into standard mortgage payments on the terms locked in from day one.
A One-Time Close structure lets you finance the land purchase and the rebuild together, converting automatically to a permanent mortgage once construction is complete, so you're not managing separate closings for the purchase and the build.
Yes. VA loans carry no county loan limit for eligible veterans with full entitlement, which is particularly useful given Palo Alto's construction costs, and is relevant to the substantial veteran community connected to the VA Palo Alto Health Care System.
Yes. I structure One-Time Close construction loans for incoming physicians and researchers using contract-based income qualification, the same approach used on our Physician Mortgage Loans page, so your build timeline can align with your start date at Stanford Health Care or Stanford Medicine Children's Health.
Mainly because there's almost no vacant land left, so nearly every project is a teardown-rebuild subject to the city's Architectural Review Board or Individual Review process, floor-area-ratio and height limits, heritage tree protections, and a permit review period that alone can take 4 to 8 months. I build your financing timeline around that reality from the start rather than assuming a standard construction schedule.
Building your new home in Palo Alto starts here. Let’s talk through your builder, your site, and your timeline.
Originally from Harrisburg, Pennsylvania, I moved to Phoenix to attend Arizona State University and have proudly called Phoenix home ever since.
My journey into the mortgage industry began with a friend’s encouragement, who saw how my energy and people-first mindset could make a difference. He was right — I found my calling.
I’ve always embraced what makes me different. With ADHD as my secret weapon, I thrive in fast-paced, detail-heavy environments. I’ve built my career on clear communication, creative problem-solving, and putting clients first, always.
Outside of work, my greatest motivation is my wife and three amazing kids. I’d be honored to help guide you through your lending journey with care, clarity, and commitment.
Who we are
Our website address is: https://loansbylehrman.com/
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