Construction & renovation

One analysis type, two project shapes

Construction is its own analysis type covering both ground-up single-close construction and renovation lending. Purchase versus refinance is a toggle INSIDE the type, not a separate analysis, because both run on the same engine: an as-completed value, a draw phase, and a two-phase payment path.

Set up the project

1. 1

   Start a new analysis and choose Construction.

2. 2

   Pick the project type. Ground-Up (Construction-to-Perm) is single-close financing that rolls into the permanent loan when the build completes. Renovation finances the purchase or refi plus improvements against the as-completed value.

   

3. 3

   Set the transaction to Purchase or Refinance. This gates which products are offered — USDA renovation products are purchase-only, for example.

4. 4

   Enter the as-completed (after-improved) appraised value. Every renovation limit is calculated against this number, so it drives eligibility as much as it drives the loan amount.

Choosing the product

The product list is filtered by your project type and transaction, and each renovation product carries its own budget ceiling. Those ceilings are the reason a deal moves from one product to another, so they are shown on the selector rather than buried.

1. 5

   Ground-up offers Conventional, FHA, and VA Single-Close C2P.

2. 6

   Renovation offers Fannie Mae HomeStyle and Freddie Mac CHOICERenovation (renovation costs up to 75% of as-completed value; that 75% is a cost cap, not an LTV limit, and both lend up to 95% LTV, or 97% paired with HomeReady / Home Possible), Freddie Mac CHOICEReno eXPress (must not exceed 10% of after-improved value), FHA 203(k) Limited and VA Renovation and USDA Limited (up to $75,000), and FHA 203(k) Standard and USDA Standard (no percentage limit, structural work allowed).

3. 7

   If the budget exceeds a product's ceiling, that is your signal to move to a Standard product rather than trim the scope.

   

The builder budget worksheet

The renovation or construction budget is its own worksheet, separate from closing costs. It meets the mortgage closing costs at the total — the budget is what the money builds, closing costs are what the loan costs — and keeping them apart is what stops a contingency reserve from being read as a lender fee.

1. 8

   Enter the line items of the project scope in the budget worksheet.

2. 9

   Include the contingency reserve and any inspection or draw-administration costs the product requires.

3. 10

   The worksheet total feeds the loan amount against the as-completed value.

   

The two-phase payment path

The client's payment is not one number. During the draw phase they are paying on the drawn balance; after completion the loan converts and they are paying the permanent payment on the full amount. Show both. A client who only sees the permanent payment is surprised during the build, and a client who only sees the draw payment is surprised at completion.