Similar to a regular mortgage a construction mortgage has an application process. When you apply the lender will look at your finances which includes your debt situation, your income and job security, and other assets you might have. The lender will be looking to see if you can afford the home and will be able to consistently make payments on the construction mortgage.
To qualify for a construction mortgage the lender will want to see a signed contract between you and the builder or developer. The contract will need to detail the total contract amount, the cost of construction and the land, and the construction start and end dates. The lender will be looking to see if the contract and schedule are realistic and achievable. The lender will also need to know if you already own the land or not, how much money you have on hand to cover the gaps between the mortgage draws. Once your construction mortgage loan amount is decided you will not be able to borrow additional amounts so it is important to have a proper contract and sufficient funds. If you have construction experience and want to do the work of the general contractor yourself you will need to provide proof to the lender to assure them.