how to do i get pre approved for a construction loan?

[Anonymous]

i want to build a small home and re sell it to make a small to a moderate profit. any where where i can get pre approved for this type of loans?

any help will be appreciated.

[ShanetheMortgageMan]

What you are referring to is a "spec construction loan", where you are speculating you'll be able to make a profit.  Local lenders are usually best for this, but you usually must have a real good track record building previous homes... if this is your first venture then you'd need to team up with an experienced builder so the lender knows that you know what you are doing.  Usually you'll have to put down 30-40% of the construction costs yourself, and the bank will finance the rest.

[coterotie]

This was my bread and butter when I was a banker.  If you had experience and a track record we'd do close to 100% of cost for you.  For some folks we would even finance the interest.  But the key words are "experience" and "track record."  If I was looking at someone with neither they had to be in the parlance of the time "stronger than an acre of garlic."  If your experience is limited, say you're a construction foreman who wants to build something on the side.  If you have good credit and own the lot outright, you could likely get financed for 100% of your cost to build, with a 10% holdback per draw until the CO is issued.  But you will have to have income and reserves to tote the note for the average selling time in the area.

This is the bailiwick of the commercial banking industry.  Go around to construction sites and see who has the billboards up saying "construction financing by xyz bank."  They will be your first stop.  Secondly go to the meetings of the local Home Builder's Association, there will be bankers handing out cards and scarfing up free food and drink. 

---

@ShanetheMortgageMan wrote:

What you are referring to is a "spec construction loan", where you are speculating you'll be able to make a profit.  Local lenders are usually best for this, but you usually must have a real good track record building previous homes... if this is your first venture then you'd need to team up with an experienced builder so the lender knows that you know what you are doing.  Usually you'll have to put down 30-40% of the construction costs yourself, and the bank will finance the rest.

---