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Meeting with a mortgage loan officer and getting started with a pre-approval is one of the most important first steps you can take. A Johnson Financial Group pre-approval is a fully underwritten loan approval that includes verification of your income, credit and down payment funds. A pre-approval will determine what type of home you can realistically afford based on your current assets and existing debt. A pre-approval also provides the opportunity to ask questions about the construction process: what’s involved, what you are responsible for and what to expect of the builder.

Use the checklist below to gather your documents for the pre-approval. Having this information readily available can make the process quick and easy.

  • Your Social Security number to obtain your credit report 
  • Pay stubs, W-2s and possibly full tax returns for income documentation 
  • Bank and asset statements for verification of liquid and retirement savings 
  • Any other necessary information based on your individual situation like business tax returns, current real estate holdings, etc. 
  • A lot loan closing statement, if you already own your lot

Learn about the builders and contractors in your area by reviewing local builders associations, attending home builder shows, talking to vendors, reading online reviews and participating in seminars.

  • Ask for references from family and friends. 
  • Ask for references of sub-contractors or suppliers the contractor works with and review their payment record. Request a copy of the contractor’s insurance policy to understand the unique coverage.
  • Review the construction bids, including the scope of the project, references, time frames and price.

Create a detailed budget to ensure you don’t overspend. Leave yourself some “financial breathing room” as new construction projects can often cost more than expected. Savings reserves are helpful should you encounter cost overages during the build process.

Make sure the lot you plan to purchase can accommodate your new home. The dimensions, pitch and location can all factor into the size and type of home you want to build. Regardless of your desired location, you’ll almost always need to choose the land before you begin the design phase. In some cases, the complexity of the building site (steep terrain, remote locations, undeveloped land, etc.) may directly impact the cost of the project.

During construction, you’ll make interest-only payments based on how much of the construction loan funds have been drawn to date.

Have additonal questions? Click here to view the answers to more of our frequently asked questions about building a home. 

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Your Complete Guide to Construction Financing

Image of the front cover of the construction financing whitepaper.



Building the home of your dreams is exciting. The thought of creating a new space designed to your exact specifications – from the size of the rooms to the color of the walls – is thrilling. Yet, just as a solid foundation is important to any well-constructed house, financing is a critical component of the construction process.

In this guide you will learn about: 

  • building a new home vs. buying a new home
  • documents and information you need for construction financing
  • tips for building your home
  • how to select a builder
  • types of construction financing
Heather Ebeling
Heather Ebeling VP Mortgage Field Manager

Heather Ebeling

As Vice President, Mortgage Field Manager, Heather is committed to learning about your unique financial situation to best meet your needs and help you improve your finances. She will provide you with loan options so you can make an educated decision. From application, to closing and long after, Heather is dedicated to providing you with an exceptional experience. Whether you are looking to purchase a new home, build the home of your dreams or refinance, she looks forward to helping you.


Loans are subject to credit and property approval, bank underwriting guidelines, and may not be available in all states. Other loan programs and pricing may be available. The term of the loan will vary based upon program chosen. Certain conditions, terms, and restrictions may apply based on the loan program selected. Property insurance is required; if the collateral is determined to be in an area having special flood hazards, flood insurance will be required. Permanent financing is subject to additional credit approval and property valuation.

*Private mortgage insurance may be required on loans with less than 20% down.

Construction Loan: Note is modified during the construction period to call for a monthly payment of interest only on funds advanced. The timing of the request to convert to fixed rate financing or to modify the rate is product dependent and may range from 180 days before to 30 days after final draw. The new interest rate will be determined by the term and rate lock period being requested.

Lot Loan: The Annual Percentage Rate is 9.266% effective 07.02.2024 for a period of one year. Rates and payments based on 85% Loan to Value. Minimum down payment of 15% required. Your loan payment will be locked in at a 1, 2, or 3 year payment schedule as selected, amortized over 20 years. A monthly payment on a $100,000 3 year lot loan with a 240 month amortization at 8.875% is $8.92 per $1,000 borrowed. At the end of the loan term, the principal balance remaining unpaid will be due in full, plus any unpaid charges due but not collected during the term of the loan. The loan may be eligible for renewal based on current credit approval, underwriting guidelines and subject to property approval. Actual payments/ monthly expenses may be greater due to term selected, property taxes and required homeowner’s insurance. If applicable, flood insurance may be required. Required closing costs, including property appraisal and title insurance, range from $1,500 to $2,000.