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How to Get a Construction Loan to Build a Custom Home

How to Get a Loan to Build a Custom Home

Hi, I’m Brian Freeman with Freeman’s Construction. Today I wanted to review what’s needed to assemble a construction loan package. The requirements include a set of plans, a cost breakdown, a septic layout, and a source of potable water. Some banks require less, and some banks require more, but these are the four basic items that I will review today.


A complete and submittable set of plans is generally needed. Complete and submittable includes floor plans, elevations, completed structural engineering, and everything else that is needed to submit to the City or County building department. It’s possible to get a construction loan with just the floor plans and elevations, we’ve done it before, but that doesn’t work with every bank.

Cost Breakdown

The cost breakdown shows the bank the total cost of the project, including the contingency. Each bank is a little different regarding the amount of required contingency. Five percent is typical, and still some banks lend with less than that. The cost breakdown needs to be accompanied by a description of materials or a specification package. We call this a spec book and prepare it for our clients to submit.

Septic and Water

Often, banks require an approved septic layout or proof that city sewer is available before funding a loan. When septic or sewer is not feasible, a lot is not buildable. Banks have also required a potable water source to be verified. If a well feeds your property, that could mean that you must complete water testing to make sure it’s potable before they will fund that loan or release the first loan draw. If city water is available, providing verification that access to a city water meter should be sufficient.

These are the core construction elements needed to submit for a loan package. Just like every other loan, the bank reviews your financials and everything else. I 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 can help you prepare your loan package. Thank you again and have a great day.

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More Information on Costs to Build a Custom Home!



1. Request a Project Consultation Online or by Phone

2. We Will Meet With You at Your Home or Building Site

3. Establish a Budget for the Project & Start Drawing Plans

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