Get Approved for a New Construction Loan by Following These Steps

I'm giving away my detailed step-by-step guide on how to get a new construction loan to build a home. Applying for a construction loan to build a new house has a lot more requirements than a traditional mortgage for an existing home. It all starts with identifying all of the construction lenders that are willing to underwrite new construction loans in the neighborhood where you want to build a property. Once you find a construction lender who is willing to work with you on your construction project, it's time to talk to a construction loan specialist at the bank to learn their specific construction loan application process. Make sure to ask them what types of construction loans they offer like construction-to-permanent or construction-only loans. Also ask them what the loan to build a house can be used towards such as permit applications or the purchase of land. Some construction loans allow you to purchase land with the loan and some do not. However, you may be able to use your construction loan to pay off an existing land loan. The first step in the construction loan application process is to get pre-qualified or pre-approved by the construction lender. The lender will require you to submit architectural plans or working drawings as part of the application. These architectural plans don't need to be engineered before approval. You will need to sign a fixed-price contract with your builder or contractor that includes the budget for every single step of the construction process. A course of construction insurance policy will need to found but you don't need to pay the insurance premium until after the construction loan is approved. After you submit your construction loan application, the construction lender will order an appraisal of the property. Depending on the results of the appraisal you may be able to build your home with zero money down. Once approved you will have one year to build your house although getting an extension is easy by paying a small fee. During the course of construction you are only responsible for paying interest on the amount of funds that have been drawn so far.