Start with the site, plans, itemized budget, builder’s experience, available cash, and your plan to sell or rent the finished property. A construction lender needs to assess both the completed project and your ability to finish it. Permit status, utilities, draw timing, and contingency can affect whether and when funding is available.
What Documents Should I Have Ready?
- Site: address, purchase contract or ownership details, existing debt, and current land value estimate.
- Readiness: plans, zoning information, permit status, utility access, and any remaining approvals.
- Budget: itemized hard and soft costs, contractor bids, contingency, and schedule.
- Team: builder and general-contractor details, relevant completed projects, and entity documents.
- Exit: expected sale value or rent, supporting comparables, and a realistic completion timeline.
This is a preparation checklist, not a promise that every program requires exactly the same documents.
Can I Start Before All Permits Are Issued?
You can explain the project before every document is ready. Be specific about what has been approved and what remains outstanding. Preliminary review does not mean the lender can close or release construction funds yet.
For example, Lima One’s construction program distinguishes build-ready vertical construction from land-development work. Confirm the selected program’s site-readiness conditions before committing to a start date.
Does Owning the Land Replace a Down Payment?
Land equity may be part of the lender’s analysis, but it is not automatically a dollar-for-dollar substitute for cash. Ask how the land is valued, how existing liens are treated, and whether you must still contribute cash or retain reserves. Provide the acquisition date, cost, and current payoff so the lender can evaluate the actual equity.
How Much Cash Should I Keep During Construction?
Separate the project’s equity requirement from the cash needed between draws. For your own planning, if the next construction milestone requires $30,000 before reimbursement and the next month’s other project costs are $5,000, that period alone needs $35,000 of available cash. Add a buffer for delays or overruns; this illustration is not a lender reserve rule.
Confirm the inspection process, draw fees, retainage, and whether a deposit or early materials purchase is eligible for funding.
What Happens When the Build Is Finished?
Your exit should be planned before you borrow. If selling, allow for marketing time and selling expenses. If renting, check the future rental loan’s property, rent, credit, and refinance requirements before assuming it will repay the construction debt. Completion does not automatically approve the next loan.
Read which loan fits each stage of a project or explore Propello’s ground-up construction funding.
Educational information, not a loan offer. Eligibility and terms depend on the program and review of your situation. Examples are illustrative.