What is the underwriting criteria for a construction loan?
In this video, hard money lender Beau Eckstein tells you what private money lenders are looking for in a construction project. Hard money lenders look more at the project than the borrower, though it is important who the borrower is and what projects they have completed in the past.
Private money lenders will want income statements, tax returns, soil reports, title reports, a resume for the contractor, as well as whether he's licensed and bonded.
Typically, hard money lenders have a lower LTV figure, in the 65 to 70 percent value. But, and this is important, the LTV is based on the future value of the completed project. While this process does involve a lot of paperwork, questions, and hard work, it is far less onerous than trying to get a construction loan from a traditional mortgage lender. Funding occurs pretty quickly, too, usually within a matter of days.