What Lenders Look for in a Ground-Up Construction Project
Getting financing for a new development starts with proving that the project makes sense. Lenders aren't simply reviewing the borrower's financial profile. They want to know whether the proposed construction can be completed within budget, whether the team has the necessary experience, and whether there is a realistic plan for repaying the loan. A strong application should include the property details, architectural or construction plans, scope of work, estimated costs, construction schedule, and information about the builder. If you are working with a general contractor, their qualifications and previous experience can become an important part of the application. The financial structure matters as well. With new construction loans , lenders commonly examine loan-to-cost because it shows how much of the overall project the lender is financing. The borrower's contribution provides equity in the project and can reduce the lender's exposure. You should also have an exit ...