Homebuilder warehouse lines (HBWLs) are revolving loan facilities that provide builders with the working capital needed to fund the construction of homes across multiple communities. Instead of being tied to a single asset or project, HBWLs operate as dynamic borrowing bases: As homes are started, completed, sold and released, capital is recycled into new homes.

HBWLs function much like inventory financing facilities in other industries. Auto dealer floorplan lines, for example, allow dealers to finance vehicle purchases from manufacturers and repay them as cars are sold. Similarly, retailers and wholesalers use inventory revolvers to finance goods on their shelves. In each case, collateral is dynamic: Assets are financed, sold, released and replaced in a continuous cycle.

By comparison, HBWLs provide builders with a revolving facility to fund multiple homes across multiple communities. Each draw is secured by specific collateral, each repayment occurs upon home sale,