To secure a loan, it’s necessary to pinpoint accurate figures for income, expenses and the budget for construction or rehabilitation. Based on these numbers, a lender will determine the amount of debt your project can support.

You’ll need to provide your lender with the I&E and Construction or Rehabilitation Budget you’ve created, along with any documentation you have that helps explain your numbers. Then your lender will begin the underwriting process to assess risk.

Because of familiarity with markets they operate in, lenders have a good sense of average construction costs and how much income a property is likely to generate. They also have standards used to assess the financial feasibility of your project.

Based on your proposed scope of work, a mortgage construction loan officer will also have a good idea, on a square-foot basis, of what it will cost to construct or rehabilitate your building. An in-house or third-party expert will review your proposed costs prior to closing your loan to ensure they are not out of line with the project type or location. As you move ahead, this review will likely include bids of general and subcontractors, as well as signed construction contracts.

From these underwriting findings, a lender will determine the type and size of loan that best fits your project’s needs and your goals and will set the specific terms of the loan.