Borrowers must meet many financial conditions in addition to having their project designs approved to qualify for a construction loan.
Lenders will usually start by looking at your debt-to-income ratio and credit score. While your lender’s particular requirements will vary, many will want a credit score of 650 or above.
When applying for a construction loan, borrowers must also have a down payment, between 20% and 30%.
When looking for a lender, make sure to shop around; there are a variety of possibilities for acquiring a construction loan, each with its own set of conditions
You must also submit the project’s construction plans to gain final approval for a construction or renovation loan. Lenders will want to examine the property’s exact drawings and a team of certified builders working on the project.
It’s vital to understand that, while completed blueprints are required for final loan approval, you can get preapproved for a construction loan before purchasing a home.