How to Get a Loan to Build a Custom Home
Hey. Brian Freeman at Freeman’s Construction. Hey, today I wanted to talk to you about getting a construction loan package together. So what is actually required and what do you got to get together for your bank so you can apply for a construction loan for your custom home products, getting ready to build.
Plans & Design
So first thing is you’re going to want to get a set of plans completed. So you’re going to work on floor plans, elevations, get your structural engineering done so it’s ready to submit to the city, or the county. It’s possible you could actually get it through with just the four plans and elevations, we’ve done it before, but it doesn’t work with every bank. So you’re going to get that ready to go.
Cost Breakdown & Contingency
You’re going to get them a cost breakdown that shows them total cost of the projects and show the contingency. Each bank’s a little different as far as the amount of contingency that they require. 5% is typical and some banks will be less than that. So you’ve got to have that ready to go for them. You’re also going to need a description of materials or the specification package, the spec book that you would submit with that as well.
Septic System or Well?
So another thing that the banks a lot of times will require before they will fund the loan is they want an approved septic layout if you’re on a septic system or proof that you are able to tie in the city sewer. And also, a lot of times we require a potable water source to be verified. So if you’re on a well, that could be that you have to actually get testing done on that water to make sure it’s potable before they will fund that loan or give you the first draw on the loan. You can also, if you’re on a city water, you just have to verify that you got access to a tie into a city water meter.
Getting Your Construction Loan!
Those are the core elements that you would need to submit for your search and loan package, along with all your financials and everything else for them to review that obviously. But as far as on the construction side and getting that part ready to go, that is pretty typical. So hope that helps. If you have more questions, feel free to reach out. I’d be happy to help you walk through that process and look at how we could help you get your own built. So, okay, have a great day. Thank you again, and it was great talking to you.