Custom construction loans are approved in two parts:

First, the borrower's basic loan application is approved by the lender similar to any non-construction mortgage loan but with additional requirements for reserve assets. Secondly, the construction package is review and approved. Most lenders also require builder approval. See 'Forms & Links' for helpful Construction Info.

What is needed for construction approval?

·                    Construction contract with a start and completion date signed by all parties

·                    Final plans and specifications

·                    Itemized construction budget/cost breakdown provided by builder

·                    Bids for any work outside the construction contract   (i.e. well, septic, etc.)

·                    All receipts and canceled checks for any pre-construction work completed*

·                    Full appraisal with value subject to completion per plans and specifications

·                    Land acquisition/purchase agreement or final  settlement statement from prior purchase if property owned less than twelve months

·                     Plot plan map and/or survey

·                    Building permit and/ or application for building permit

·                    Course of construction or builder’s risk insurance policy

What is needed for builder approval?

·                    Current contractor’s license

·                    General liability insurance

·                    Worker’s comp insurance, if applicable