Generally, if you can qualify for a conventional loan you can qualify for a construction loan, with a few extra steps. The construction loan is just an added part of our qualifying process. For a standard conventional loan the agency (Fannie Mae or Freddie Mac) automated underwriting system will read income for ratios, assets to cover the cost of the transaction, and credit score/history to determine if the file meets their guidelines. In many cases a lower credit score and the absence of reserves will still produce an approval result for a conventional loan.
When we look at qualifying for the construction loan we would require a strong credit profile and reserves. We start with the end loan structure and loan approval and then, we can determine if a construction loan will work for you.
The construction loan process looks at more elements of risk than just the initial loan approval. We look at the big picture, which includes the scope of the project that will be undertaken, the location of the project, and the builder/contactor that will be doing the work. We need to make sure you qualify for what you want to do, that the market will support a value for the project, and the person or company you have selected for the project is qualified and licensed.
We are here to help you through the steps so you don’t have any sleepless nights wondering if construction financing can work for you! Help is only a phone call away at 952-853-0222.