A construction loan lives or dies by the builder. You can have perfect credit, perfect assets, perfect plans — and the file still won't close if your builder can't pass vetting. Here is exactly what underwriting looks for.
The Builder Package — What Gets Submitted
On an OTC construction loan through NEXA Mortgage's wholesale network, your builder submits a vetting package alongside your borrower application. The package is reviewed by a construction-specialist underwriter and approved once — after which the same builder can be used on repeat builds without re-vetting, provided their licensure and insurance stay current.
- Current state GC licensure (copy + verification)
- Certificate of liability insurance with $1M/$2M minimum
- Certificate of workers' compensation insurance
- Three completed custom-home references (project address, year, borrower permission to contact)
- Current financial statement demonstrating working capital for the project
- Signed construction contract with fixed or GMP pricing
- Draw schedule mapped to AIA G702/G703 pay application format
- Clean lien-history search on the builder
Contract Structures Your Lender Actually Likes
Fixed-price — Best. Builder owns overage risk. Draw schedule is predictable.
Guaranteed Maximum Price (GMP) — Good. Builder shares savings and absorbs overage above the GMP. Common on architect-led builds.
Cost-plus with cap — Acceptable with strong borrower reserves. Cost transparency is high, but so is overage risk.
Cost-plus with no cap — Avoid. Most lenders will decline without a cap or conversion to GMP.
Builder Qualification Checklist
Evaluate your builder against OTC review criteria.
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Builder Qualification Checklist — Run Through Before Your LO Call
The inline calculator above walks through the same questions we ask during vetting. If your builder scores poorly, that's information: either coach them through the gaps before application, or find a different GC. Neither outcome is a disaster — but discovering it in underwriting, six weeks in, is.
Owner-Builder Scenarios
Conventional OTC guidelines allow owner-builder on primary residences with additional documentation:
- Documented construction management experience or licensure
- Signed subcontractor agreements for the major trades (framing, plumbing, electrical, HVAC, roofing)
- Higher reserves (typically 12+ months PITI) post-close
- Supervising architect or construction manager may be required depending on project size
Owner-builder is harder, not impossible. Start this conversation with your LO before you make any commitments.
Reading Path
- First-Time Builder Loans — Complete Guide — the consumer-side companion
- Custom Construction — Architect-Led
- Tear-Down Rebuild Loans
- OTC Construction Loan product page
- OTC Calculator Suite
Talk to an OTC Construction Specialist
Tell us about your project. A Homestead Capital Partners construction-loan specialist (routed through NEXA Mortgage's wholesale lender network) will review your scenario and return with program fit, rough timeline, and the documents needed to move forward.
Homestead Capital Partners NMLS #2587985 | NEXA Mortgage LLC NMLS #1660690 | Licensed in 47 states (excluding NY and GA). Equal Housing Lender. Content is informational and not a commitment to lend. All loan approvals are subject to underwriting, appraisal, title, and credit review. Program features, eligibility, down-payment, reserve, and LTV requirements are verified against United Wholesale Mortgage (UWM) product guides and Reveal Lending non-QM guidelines. Not all applicants will qualify. Rates, points, and terms are not quoted in this article and require a written loan estimate under TILA/Reg Z prior to application.