1. Feasibility before commitment
Confirm the land, builder, conceptual budget, borrower qualification and likely completed value before paying heavily for plans or nonrefundable deposits.
2. Assemble the project file
The lender typically needs plans, specifications, signed contract, detailed cost breakdown, permits or permit plan, builder information, land documentation and contingency.
3. Appraise the proposed home
The appraisal evaluates the property as if completed according to plans and specifications. Cost does not guarantee value; unique upgrades may not receive dollar-for-dollar support.
4. Close before construction
At closing, liens, equity, loan amount, budget and draw controls are established. Funds are not generally released to the borrower as a lump sum.
5. Draw, inspect and manage changes
The builder requests draws after milestones. Inspections verify completion. Change orders should be documented before work proceeds because they can affect budget, contingency and value.
6. Complete and convert
Final inspections, occupancy approval, lien documentation and other closeout items support conversion to the permanent phase under the loan terms.
Prepare the project before choosing the loan
Construction and renovation financing succeeds when the scope, participants and numbers agree. An early feasibility review can prevent spending time and money on a project the financing cannot support.
- Land status, purchase price and existing liens
- Builder or contractor, plans, specifications and contract
- Line-item budget, contingency and expected timeline
- Estimated completed value and comparable properties
- Temporary housing, carrying costs and change-order plan
| Stage | Typical focus | Borrower action |
|---|---|---|
| Pre-plan | Feasibility and qualification | Share land, budget and timeline |
| Underwriting | Borrower, builder and collateral | Complete documents quickly |
| Closing | Equity and construction controls | Verify final budget |
| Build | Draws and inspections | Approve changes carefully |
| Completion | Closeout and conversion | Resolve final documentation |
Frequently asked questions
How long does construction underwriting take?+
Timing depends heavily on complete plans, specifications, builder approval, appraisal and permits. Begin before the anticipated construction start.
When does the builder receive money?+
Funds are generally released through draws after documented milestones and inspections, not as one lump sum at closing.
Can plans change after closing?+
Changes may be possible, but they should be approved and documented because they can affect budget, contingency, value and completion timing.