Application Requirements For Construction Loans

“Construction Mortgage Lenders Are Typically Interested In the Following Application Items When Considering Either A Residential Or Commercial Construction Loan Application.”

If you’re getting ready to apply for construction financing, the following is an outline of the most common information that is typically included in an application for financing.

While this is not meant to be an exhaustive list, it does provide a solid overview of the information you’re going to need to put together in order to get a construction mortgage commitment in a timely fashion.

Further, I have compiled the list so that it is directly relevant to both a residential and commercial construction project.

  • Application Form Information. Like any other type of financing you may apply for, you will need to complete the lender’s application form providing pertinent information regarding your own identity, business description if applicable, and the personal net worth of the applicants. While you will likely be using a lender’s forms for this purpose, you can still be prepared in advance by creating an up to date personal net worth statement, business registration or incorporation dates, bank and trade references, and so on.
  • Construction Plan. Each project is going to have a basic plan of attack and project overview that outlines the project being completed, who will be doing the building (turn key builder, general contractor, self build), and the basic costs and time lines, etc.
  • Permits, Plans, and Drawings. One way to get a lenders immediate attention and speed up the construction financing process considerably is to have all the paper work in order in terms of drawing, plans, and permits. This group of documents will not only clearly show a lender what’s being built, but that you have the approval to build it.
  • Building Budget. A well documented project budget generates a lot of confidence the accuracy of the cost projections as well as your ability to put together a project plan that isn’t likely to be compromised by a bunch of missing items that need to be added in later. Budget summaries should be will supported by written quotes and contracts for the work and material lined up in order to further build on their accuracy.
  • Construction Time Line. Each task or action within the project, and the related cost of each as well as the timing for cost repayment should be organized into a construction project time line. Within this one picture, the whole project can be summarized in terms of activities, timing, and costs. The more detailed the time line, easier the project management will likely be as there will be very little if any guess work as to what needs to be done when and for how much.

Lenders may ask for additional information specific to an individual project, but for the most part, the above list will represent the 80/20 of a construction loan application.

To get help putting your application together and presenting to the most relevant lenders, give me a call and we can go through everything together.

Click Here To Speak With Construction Mortgage Broker Joe Walsh.