The Construction Loan Process

No one likes surprises. I'd like you to be fully informed about the application, closing and draw process before you begin. Here's a brief description of what you can expect as we move forward;

  • Pre-Qualification- We start with a phone call. We will discuss your employment, income, cash on hand, credit, land (if you already own it) and what you're plans are. If you wish to proceed, we move to Step 2 and begin to collect documents. 
  • DocumentationI would need the following documents from you;
    • Income- Your most recent 30 days of pay stubs and last two years of federal income tax returns. If you are self employed we will need your last 2 years of tax returns.
    • Assets- Your most recent 2 months of statements for all your cash accounts (checking, savings, investment and retirement).
    • ID- Federal law requires that I collect copies of your driver's license and social security card.
    • Land- If you already own the land you wish to build on, I need a copy of the deed, survey (if you have one), and settlement statement if you have purchased the land within the last year. You can use your land equity in lieu of a cash down payment. 
    • Purchase Agreements- You eventually will need signed agreements for all work to be performed including the home. 
  • Builder Approval- If your builder is not already on our approved list (and many are), then they must fill out a builder approval application. The application will be reviewed by the lender.
  • Formal Application- We meet and I go over all the documentation with you. We can spend as much time as you like going over any questions you have.
  • Underwriting- Your application is reviewed by the underwriter and given conditional approval.
  • Appraisal- A value is given to your project based on other recent home sales.
  • Final Approval and Closing- Once your file has been given final approval, we will sign all the closing documents at a title company. The land will be put in your name (if it isn't already), any lien will be paid, and construction will begin.   
  • Draws for Construction- As work is completed, payments are issued to the builder, subcontractors and suppliers.  
  • Completion, C of O and Final Draw- Once the project is completed and the Certificate of Occupancy is issued, the builder will receive their final payment.
  • Modification- Your loan with the lender is modified from a construction loan to an FHA or VA fixed rate loan and your payments begin. 

Again, this is just a brief description. I'd be happy to discuss your construction project and go into more in detail with you on the phone or in person. Feel free to call or email me.


Jerry Thomas, Mortgage Loan Officer NMLS #134090