Do I need plans and a budget for a construction loan? Yes. The appraisal on a construction loan is completed based on the plans, budget, specs and details provided to the appraiser. The more details you provide to the appraiser, the better chance for a favorable outcome. Essentially you want to give the appraiser enough information so he/she can understand how large your home will be, the total cost of the project, and the specific materials that will be used to build it.

Typically what are needed are plans, an itemized budget, and specifications:


Building plans come in many different forms and level of detail.  The initial plans may be in the form of floor plans and elevations which show what the outside of the home will look like.  As long as floor plans have dimensions so an appraiser can note the size of the home and rooms, floor plans and elevations are acceptable for the appraisal.  There are more detailed plans like the permitting set or construction set, but those are not required.

There are cases where plans are not needed.  In cases where all work will be internal and the floor plan will stay exactly the same, plans are generally not required.


The budget is the collection of costs for each aspect of the project.  Because everyone’s project will be a little different, everyone’s budget will be a little bit different as well.  Establishing a good budget is one of the most important aspects of your construction project and will be a huge determinant of how successful your project is.  You will want to make sure the budget you have with the builder you choose is solid and reliable.  It’s important because once you close and enter the construction phase, that budget is fixed. The draws will be paid from that specific budget breakdown.  Budgets from builders can come in many different formats.  Eventually the bank will require a “sworn statement” which will breakout the budget based on each trade and include the builder and subcontractors costs, materials, and builders profit and overhead.

Specifications (Specs)

While a budget lays out how much you will spend on various items (flooring for example), it doesn’t lay out specific details about those items.  It’s that level of detail that is very helpful for appraisers.  While the size of a home is one of the most important factors that affect the appraiser’s opinion of value, the quality of construction is very important as well.  This is especially important in custom home building.  Client’s who are building a custom home with high quality construction want to be able to separate their project from the “spec” house that sold down the street with greatly inferior construction.  A detailed spec sheet can do this. The spec sheet is also very helpful for you the client as it will lays out the items you and the builder agreed upon based on the price.  This will eliminate confusion or miscommunication during the construction phase.