Private Lending Resources

Construction Loan Application Process: A Step-by-Step Guide

June 5, 2024

When it comes to obtaining a private loan for a construction project (multi-family, office, residential, medical, land bridge loan), it’s important to understand the loan application process and have transparency with your lender about the process.

RoseRock, a trusted private lender in Dallas, Texas, knows the importance of each step of the loan application process and works directly with their clients to ensure all parties have what they want and need from the transaction.

So, you’ve found a promising real estate investment opportunity—what next?

Initially, it’s important to determine whether you will utilize private vs. traditional bank financing to fund your project.

Especially for the purposes of a construction loan, there are many benefits to working with a direct private lender. Direct loans are generally more timely than traditional loans, which can mean the difference between getting the project/property you want or potentially losing it to the competition.

hard hat and construction plans on table

Hard money lenders for commercial real estate, such as RoseRock, streamline their loan process to make it fast and efficient—to the benefit of everyone involved.

A few other highlights offered within the loan process of private money lenders like RoseRock include:

  • Interest-only payments
  • Short term loans
  • No maximum loan to cost
  • Minimum loan amount of $100,000
  • First lien only

To name a few.

Once you’ve determined you’re going to work with a direct lender, you can get started on the first steps of the loan application process.

RoseRock building exterior
1. Preparing Paperwork for a Loan

Get your paperwork in order. It’s necessary to demonstrate to your lender that you are organized and have all the proper documentation you’ll need prepared and ready when it’s required.

2. Credit Score

What’s your credit score? It’s important to have a good credit score and be in good financial standing before you even search for a lender to finance your project. Lenders want to be sure they’re making a solid investment without unnecessary risk, so it’s important to have your credit and finances in order before beginning the loan process with a private lender for commercial real estate.

3. Loan Interest Rate

It’s important to know and understand the interest rate you’ll pay on your loan. Make sure you fully know the amount of interest you’ll pay during the construction process and factor in any potential loan variability.

RoseRock building exterior
4. Construction Budget

What’s your budget? Do you have each budget item clearly documented and evidenced? Lenders want to see you’ve done your due diligence when it comes to researching the financial needs of your project.

Other financial documents to have in order might include blueprints/construction plans, financial statements, tax returns, proof of land ownership, and more. Having your paperwork in order is a benefit to both you and your lender in the loan application process.

In addition to your personal financial documentation, you’ll need to have your construction project information ready for your direct lender to review. Make sure you’re able to provide your private lender details such as labor and material costs, construction budgets, timelines for construction, specs and building plans, and any other details they require.

Once you’ve compiled and organized all your required documentation, you can begin moving forward with the application process.

4. Loan Application Checklist

A couple other details your private lender might require before they begin processing your loan:

  • Your lender may require you to verify the value through a licensed, third-party appraiser.
  • Do you have a correct, up-to-date survey on hand? Lenders will require that any properties being used as collateral have a current survey available.
  • Private lenders like RoseRock have streamlined their loan process to ensure the development proceeds quickly and efficiently. Once all the required documentation is in order and has been approved, the timeline might go something like this:
    • Complete loan application
    • Review term sheet
    • Work with your private lender to process the loan
    • Sign loan documents
    • Close on your loan and begin construction!

The loan application process has a lot of steps, but doing your due diligence, research, and being organized with all the details can make all the difference in helping you obtain the loan you need to begin your commercial construction project.

When you’ve compiled and organized the necessary materials, contact a trusted local private lender and begin the loan application process—don’t wait and miss out on a valuable real estate opportunity!

Private Lending Client Testimonial

“Had a tremendous experience with Brett Lamm and the entire Roserock team. Given the turbulent economic times, they were patient and willing to stick in with the project until we secured and ultimately closed on our long-term financing. I will be absolutely be using them in the future when the need arises.”

— Beau J.

© RoseRock