How to Get a Loan for New Home Construction

New home construction is an exciting real estate investing venture, and Renovo can help. With multiple financing options available, how to get a loan for new home construction has never been easier. Navigating the financing options is where we shine. Before looking at your different loan options, you’ll want to make sure that your personal finances are in order, so the process goes smoothly and ensures you get the best possible loan terms for new home construction. While Renovo can be a partner in connecting you with other real estate investors, you’ll still want to be the most financially attractive applicant.


1.Bring up your credit score

Although credit scores can range between 300 and 850, higher scores are preferable. When you apply for a new home construction loan, lenders will check your credit score to ensure they make a wise decision when loaning you money for your new home construction. With a higher credit score, your interest rates will be manageable and it’ll be less likely that you’ll be asked for a large down-payment. In an ideal lending situation, your credit score will be higher than 740.



2. Organize your employment verifications and income information

When getting approved for a new home construction loan, lenders will also look at your debt-to-income ratio. By already compiling a couple years’ worth of W-2s, 1099s, tax returns, or proof of any other steady income, the time it takes to get approved will be shorter. We also recommend having the contact information for your company’s HR department for employment verification, and a couple of recent pay stubs ready to go.



3. Pay down your debts

If you want to improve your debt-to-income ratio significantly, paying down your debts should be the first thing you work on. Having a lower debt-to-income ratio when your credit score is great, as it can help with your interest rates and loan terms. You’ll also raise your credit score by paying down debts.



4. Research the cash flow opportunities for your target property

Most loan terms will rely on the property itself if you want to work with asset-based lenders. You’ll want to ensure that the cash flow from the property will be enough to pay the mortgage, insurance, taxes, and any necessary maintenance of the property.



What to expect after you’re approved

Once you’ve been approved for the new construction loan, you will review the loan with a loan officer and an underwriter to order an appraisal. You will need to have construction plans drawn and other relevant documentation. The term sheet will be written, outlining the details of the loan, and then it moves to processing and then closed by an attorney.


Renovo can work with you to connect you with the right lender, based on your project.



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Renovo’s process has been designed around the needs and goals of investors. By choosing to focus on you, we’re able to secure the best possible funding for your new construction loan. Our closing team works with our clients leading up to their closings and providing the guidance and assurance needed to close deals quickly - it’s why we’re frequently recognized for going above and beyond. We have a dedicated team for each project. Most importantly, when we say we'll do something, we mean it.