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Top Questions to Ask Your Construction Lender Early On
Choosing your construction lender is about way more than rates. There are some things you'd better ask them early on to save yourself a lot of pain down the road.
- Questions About Their Process and Timeline
- What's your typical timeline from application to closing?
- How do you handle delays in third-party reports or approvals?
- What's your current pipeline and how might that affect my timeline?
- Questions About the Construction Draw Process
- What's your standard draw approval timeline?
- Who approves draws, and how often do they meet?
- What documentation do you require for each draw?
- How do you handle change orders and budget adjustments?
- Questions About Their Team and Experience
- Who will be my primary contact during construction?
- How many similar projects has your team closed in the past year?
- What's your typical loan officer and underwriter workload?
- Questions About Flexibility and Problem-Solving
- How do you handle unexpected site conditions or cost overruns?
- What's your policy on budget reallocation between line items?
- Can you share an example of a challenging project you helped navigate?
- Questions About Costs and Requirements
- What are all the fees beyond your published rate sheet?
- What third-party reports will you require and who pays for them?
- How do you handle cost overruns if they occur?
- Red Flags in Their Responses
- Questions You Should Be Prepared to Answer
- Conclusion
- Get Financing
Most developers approach lender selection backwards. They get swept up in rate shopping and term negotiations before they understand the most crucial factor: how this lender actually operates during the 12-24 months you'll be working together.
It's not hard to find a lender anymore. With a tool like Janover Pro, you can find huge numbers of lenders very quickly who will potentially finance your build.
Here's the thing: A construction loan isn't like a mortgage where you sign papers and forget about the lender until payoff. This is an active, ongoing relationship that can make or break your project timeline and budget. The lender you choose becomes your de facto business partner, whether you planned it that way or not.
The difference between a smooth construction experience and a nightmare often comes down to asking the right questions upfront. Not the softball questions that lenders expect, but the specific operational questions that reveal how they really work.
Here are some of the questions that matter most.
Quick disclaimer that this is genuinely a pretty long and comprehensive list, and you might feel awkward showering your lender with questions. But if you don't have a decent answer for most of the things here, all you're doing is gambling with the future of your development.
Questions About Their Process and Timeline
What's your typical timeline from application to closing?
This isn't asking for their best-case scenario or what they promise in marketing materials. You want their realistic, average timeline based on recent closings. A lender who says "45-60 days" but whose actual average is 90 days will torpedo your construction start date.
Listen carefully to how they frame their answer. Do they break down the timeline by phases (underwriting, appraisal, approval, documentation)? Can they identify the typical bottlenecks? A sophisticated lender will explain the process and point out where delays commonly occur (and this is a great opportunity to ask what you can do to streamline things!). A less experienced one will just throw out a round number and hope for the best.
Ask for specifics about what could extend their timeline. Environmental issues? City permit delays? Title complications? The best lenders have seen these problems before and build appropriate buffers into their estimates.
How do you handle delays in third-party reports or approvals?
Construction projects rarely proceed exactly as planned, and loan closing timelines are no different. What happens when the environmental report takes longer than expected? How do they manage appraisal delays? Do they have backup vendors or expedited processes?
This question can show whether the lender understands construction lending or just treats it like any other commercial loan. Experienced construction lenders know that delays in one area need to be managed aggressively to avoid cascading impacts. They'll have relationships with multiple service providers and processes for pushing things forward when needed. If they don't, it doesn't mean they aren't good lenders, mind you, but it does highlight some potential friction points down the road.
Pay attention to whether they take ownership of managing their vendors or push that responsibility back to you. The best construction lenders coordinate their own process and keep you informed, rather than making you the project manager for their loan closing.
What's your current pipeline and how might that affect my timeline?
A lender's current workload directly impacts your experience. If they're swamped with deals, your file might sit for weeks waiting for attention. If they're slow, they might be desperate enough to overpromise just to get your business…and then underdeliver because they can't rise to the challenges.
This question also reveals their transparency and self awareness. A good lender will acknowledge their current capacity constraints and either adjust timeline expectations or explain how they manage workflow to prevent delays. A problematic lender will dismiss the question or claim it doesn't matter.
Don't just ask about their overall pipeline — ask specifically about their construction portfolio. Some lenders are busy with conventional deals but have plenty of construction lending bandwidth, or vice versa.
Questions About the Construction Draw Process
What's your standard draw approval timeline?
This may just be the most important question you ask, because slow draws can kill construction projects. Don't settle for vague answers like "we move quickly" or "as fast as possible." Get specific numbers.
The best construction lenders can tell you their average timeline from draw submission to funding, broken down by the size and complexity of the request. They should be able to explain what happens on each day of their process and identify potential delay points.
Ask about their funding schedule, too. Some lenders only wire funds on specific days of the week or month, which can add unnecessary delays even after approval. Others fund as soon as approvals are complete.
Who approves draws, and how often do they meet?
Understanding the approval chain helps you anticipate potential bottlenecks. Is there one person who can approve your draws, or does everything go through a committee? How often does that committee meet? What happens if a key approver is unavailable?
A streamlined approval process doesn't necessarily mean lower-quality oversight — it often means the lender has invested in training their staff and built efficient systems. Complex approval chains usually indicate inexperience or overly bureaucratic processes.
Also ask about approval thresholds. Can smaller draws be approved at lower levels while larger ones require committee review? This kind of tiered approach often provides the best balance of speed and oversight.
What documentation do you require for each draw?
Get the specific list upfront, not after your first submission. The requirements vary dramatically between lenders, and knowing them in advance lets you set up proper systems and expectations with your construction team.
Some lenders require original signatures on everything. Others accept electronic submissions. Some want detailed photo documentation of work progress. Others rely primarily on their inspector's reports. Understanding these requirements helps you budget time and resources for draw administration.
Ask if it's possible to see a sample draw package that meets their standards. This can help get rid of any ambiguity about their expectations and prevent the frustrating back-and-forth that occurs when submissions don't meet (sometimes unstated) requirements.
How do you handle change orders and budget adjustments?
Change orders are inevitable in construction, but different lenders can handle them, well…very differently. Some treat every change like a major loan modification requiring extensive re-underwriting. Others have streamlined processes for common adjustments.
Find out their approval thresholds for changes. Can they approve small adjustments internally? What triggers a more extensive review? How long do these approvals typically take? What documentation is required?
Also ask about budget reallocation between line items. If you save money on one trade but need more for another, can they handle that administratively or does it require formal approval?
Questions About Their Team and Experience
Who will be my primary contact during construction?
Don't assume it's the loan officer who's courting your business. Many lenders hand off construction administration to different teams, and the quality of that handoff can really affect your experience.
It's not unreasonable to ask to meet with the person who will actually handle your draws and construction oversight. What's their background? How many active construction loans do they manage? How do they prefer to communicate with borrowers?
The best construction lenders have dedicated construction specialists who understand building processes and can spot potential problems early. Less sophisticated lenders might assign your file to whomever has capacity, regardless of construction experience.
How many similar projects has your team closed in the past year?
This reveals both their experience level and their current capacity. A team that's closed 50 similar projects has seen most of the potential issues and developed efficient processes. A team that's closed three might be learning (on your dime).
Ask specifically about projects similar to yours — same property type, similar size, comparable complexity. Generic commercial lending experience doesn't automatically translate to construction lending competence.
Also probe their recent activity. A team that was busy two years ago but hasn't closed much lately might have lost key staff or fallen behind on current market practices.
What's your typical loan officer and underwriter workload?
Overloaded staff means delayed responses and increased errors. A loan officer managing 40 active deals can't give your project the attention it deserves. An underwriter with a three-week backlog will slow your approval process — regardless of how strong your file is.
Ask about their staffing levels relative to their current pipeline. Do they have backup coverage for key roles? What happens when someone goes on vacation or leaves the company?
The best lenders monitor workloads actively and adjust staffing or pipeline volume to maintain service levels. Problematic lenders just keep piling on deals until something breaks.
Questions About Flexibility and Problem-Solving
How do you handle unexpected site conditions or cost overruns?
Every construction project hits surprises. Maybe there's contaminated soil that wasn't identified in the Phase I environmental. Maybe steel prices spike during construction. Maybe the city requires unexpected infrastructure improvements.
How a lender responds to these situations reveals their true character. Do they work with you to find solutions, or do they immediately start pointing to loan covenants and demanding additional equity?
Ask for specific examples of how they've helped other borrowers navigate unexpected challenges. The best construction lenders understand that flexibility often protects their position better than rigid enforcement of original terms.
What's your policy on budget reallocation between line items?
Construction budgets are estimates, and reality rarely matches estimates perfectly. Every lender knows this.
You might save money on site work, for example, but need additional funds for mechanical systems. Most experienced construction lenders have policies that allow reasonable reallocation without formal loan modifications.
Find out what threshold triggers a formal review. Can you move $50,000 between line items administratively? What about $100,000? Do they require pre-approval or just notification after the fact?
Also ask about their contingency policies. How can you access contingency funds if needed? What's their approval process and timeline for contingency draws?
Can you share an example of a challenging project you helped navigate?
This open-ended question often reveals more than the specific questions above. How they tell the story — what they emphasize, what they take credit for, how they describe their role — tells you a lot about their approach to problem-solving.
Listen for whether they position themselves as a partner who helped find solutions or as a creditor who enforced terms. The best construction lenders take pride in helping projects succeed even when things get complicated.
Pay attention to the types of challenges they mention. Environmental issues? Contractor problems? Market changes? Their experience with relevant challenges gives you confidence they can handle similar issues if they arise on your project.
Questions About Costs and Requirements
What are all the fees beyond your published rate sheet?
Rate sheets never tell the whole story. There are origination fees, processing fees, inspection fees, legal fees, and various other charges that can add up quickly. Get a comprehensive fee schedule upfront to avoid surprises later.
Ask specifically about ongoing fees during construction. How much do they charge for draw processing? What about change order reviews? Some lenders include these services in their base pricing; others charge separately for each interaction.
Also clarify who pays for what. Do they expect you to cover their legal fees? What about their consultant costs? Understanding the fee allocation helps you budget accurately.
What third-party reports will you require and who pays for them?
The list of required reports varies significantly between lenders. Environmental assessments, appraisals, market studies, engineering reports, surveying — these costs add up quickly and can extend your closing timeline if not managed properly.
Ask for their complete list of required reports and their approved vendor list. Some lenders have negotiated rates with preferred vendors that can save you money. Others let you choose your own vendors but have specific qualification requirements.
Find out their policy on report updates. If your project timeline extends, will they require updated reports? How current must reports be at closing?
How do you handle cost overruns if they occur?
This is different from change orders — this is about what happens if your total project cost exceeds your budget despite your best planning efforts. Do they have mechanisms for providing additional funding? What are the requirements and approval processes?
Some lenders will consider loan increases if they're supported by updated appraisals showing sufficient value. Others have strict policies against any increases regardless of circumstances.
Understanding their approach helps you plan your contingency strategies. If they won't consider increases, you need larger cash reserves. If they might consider increases under certain conditions, you can plan accordingly.
Red Flags in Their Responses
Watch out for certain types of responses that indicate potential problems ahead. Vague answers about timelines or processes suggest they either don't track their performance or don't want to share unflattering numbers. Either way, it's not really a good sign.
Unwillingness to connect you with their construction team would also be pretty concerning. If they won't let you meet the people you'll actually be working with, they're either hiding something or don't value the construction phase of the relationship.
Inability to provide written procedures or requirements is another major red flag. Professional construction lenders have documented processes and clear requirements. If everything is handled "case by case" or "as needed," all you can expect are inconsistency and surprises.
Be wary of lenders who promise everything without acknowledging any potential challenges. Construction lending always, always, always involves inherent complexities and risks. A lender who claims their process is always smooth and fast either lacks experience or isn't being straight with you.
Questions You Should Be Prepared to Answer
Remember that this is a two-way evaluation process. Experienced construction lenders will ask probing questions about your project, your team, and your experience. Be prepared to discuss your development timeline, your contractor selection process, and your contingency planning.
They'll want to understand your market analysis and how you've validated demand for your project. They'll probe your construction budget and ask about how you've accounted for potential cost escalations.
Strong answers to their questions improve your negotiating position and often lead to better terms. Weak or unprepared answers might result in higher rates, more restrictive covenants, or outright rejection — after all, it's more risk (perceived or real) for the lender.
The best construction lending relationships are partnerships where both sides understand what they're getting into. A lender who asks good questions is generally one who will provide good service throughout the construction process.
Conclusion
Choosing a construction lender based solely on rates and terms is like buying a car based only on the monthly payment. The real value — or the real pain — comes from the ongoing relationship and how well they execute their role as your construction financing partner.
The questions above might seem extensive. Honestly, they are. But they're designed to uncover the operational realities that will impact your project success far more than a quarter-point difference in interest rate. A lender who answers them thoroughly and confidently is demonstrating both competence and transparency — two qualities you definitely want in a construction financing partner.
Take the time to ask these questions upfront. Document the answers. Compare them across potential lenders. The hour you spend on this evaluation process could save you months of headaches and thousands of dollars in project delays and cost overruns.
The right construction lender doesn't just provide money — they provide expertise, efficiency, and support when challenges arise. Make sure you choose one who can deliver on all three.