Documentation for Pre Approval on New Construction

[Anonymous]

I had the builders preferred lender run my credit and sent him my 2015 tax return to show my income from last year (I'm self employed) so that I could get an idea of what price range to look in as far as floor plans go and so that he could confirm with the builders rep that I was qualified to begin the process of picking out a lot to build on. He mentioned not being able to issue a preapproval letter until I have a lot/floor plan picked out as their preapprovals are property specific. Once I provide this information to him will there be other documentation that I will need to provide? The builder is the one financing the construction so I won't be taking out the loan until it is completed. Just trying to be prepared so I can have everything together once we get the lot picked out. Since he knows we will be saving for the down payment and closing costs during construction I didn't know if they would request things like last 2 months of bank statements, etc. 

[MauiMan85297]

If you're 5-6 months from closing they pull credit to see where you stand and the tax return because of self employment, they aren't concerned at all at this point you have $20 in your account, when you're 2-3 months out then you'll have to show proof (bank statements) that you have available funds for DP, closing costs.

I'm going through same process as I just started 4 days ago and pre-qual letter was sent to builder.

[Anonymous]

So you didn't have to provide documentation for the preapproval to get the construction process going? We are hoping to start building in Sept with a closing in March. We have to put a $10,000 deposit down when we sign the contract that can be used towards the 5% down that we planned to pay at closing.

[MauiMan85297]

Don't get pre-approval and pre qualified confused, pre qual means to the builder that they can move forward with the construction and you fit the guidelines to qualify (Credit, income), a pre-approval in most cases would last 90-120 days and you're too early in the process to get pre-approved.  I only put down $500 earnest money because I'm VA and don't require any down money but your builder would ask 3-5% earnest down.

[Anonymous]

The builders agent said we have to be pre approved before starting construction. 

[MauiMan85297]

So if the builder requires that (YMMV) then you have to supply all docs necessary (bank statements, last 2 years of taxes, etc) but the money is not a deal breaker because you may have funds by that time that they have to re-do the approval.