Construction Loan Requirements & Documentation
Generally speaking, loan requirements and documentation for custom home construction projects can be broken down into the following three packages/categories:
- Homeowner/Borrower Credit Package
- Builder Information Package
- Project Information Package
Certain basic or standard documentation is required by all lenders, such as tax returns, building plans and a licensed building contractor, but lenders customize many of their requirements to meet their specific needs.
What many homeowners and builders don’t realize, and many mortgage/loan brokers seem to forget, is that simply providing the necessary documentation doesn’t guarantee loan approval. Lenders may not spell it out for you, but they all have a preference as to how construction loan submissions should be packaged and presented.
All we do at HomeConstructionLoans.com and the Arroyo Consulting Group is make construction loans and when you only do one thing you better do it better than everyone else. We have an extensive network of construction lending sources and one of our key advantages is knowing exactly how each one of our lenders prefers to have their loans packaged and presented.
Knowing how to present your financial status, budget, builder and your project can not only make or break your project, it can also determine the speed at which you complete the financing stage of your project.
Homeowner/Borrower Credit Package – Standard Documentation
- Tax Returns for the two most recent years – All Borrowers
- W2’s for the past two years – All Borrowers
- Pay stubs covering the most recent 30 day period – All Borrowers
- Asset Statements for the two most recent months – including any retirement accounts
- Two years Tax Returns for income other than employment – All Borrowers
- Current P & L statement for self-employed borrowers
Builder/Contractor Information Package
- Description of Materials
- Completed Builder Package (General Resume/References)
- Copy of Current Contractor’s License & Insurance Bond
- Completed W9
- Credit Report
- Proof of Current General Liability Insurance
Construction Project Information Package
- Complete set of construction plans signed by contractor & borrowers (PDF Format)
- Construction Contract signed by contractor & borrowers
- Line Item Budget prepared by the contractor
- Completed Construction Loan Budget Worksheet
- List of any Prepaid Items
- Lot/Land Details – Deed or offer to purchase, protective covenants and/or other deed restrictions
- Detailed description of architect responsibilities