Most families building a custom home in Cache Valley do not pay cash for construction. They use a construction loan, and that loan depends on something many people do not expect: their house plans.
Before a lender will approve the loan, an appraiser has to value a home that does not exist yet. The only way to do that is from your plans, your specifications, and your builder’s budget. When those documents are complete and consistent, approval moves quickly. When they are not, the loan stalls, and so does your groundbreaking date.
We have drafted plans for Cache Valley homeowners since 1997, and we regularly hear from clients whose lender asked for “a full set of plans” with little explanation. This guide explains how construction loans generally work, what lenders typically ask for, and how to keep your plans from becoming the bottleneck.
This article is general information, not financial advice. Every lender has its own requirements, so confirm details with your loan officer.
Key Takeaways
- A construction loan pays your builder in stages as work is completed, rather than in one lump sum.
- Lenders appraise your future home from the plans and specifications, so incomplete plans delay approval.
- Most lenders ask for a complete plan set, a specification sheet, a builder contract, and an itemized budget.
- Square footage and finish details must match across the plans, the bid, and the appraisal.
- Finishing your plans before you apply is one of the simplest ways to keep your build on schedule.
How Construction Loans Work
A traditional mortgage pays for a finished house in one transaction. A construction loan is different. The lender approves a total amount, then releases money in stages, often called draws, as the builder completes each phase of work. An inspector usually verifies progress before each draw is paid.
During construction, many loans require interest-only payments on the amount drawn so far. When the house is finished, the loan either converts into a long-term mortgage or is paid off with a new one.
Construction-to-Permanent Loans
Also called single-close or one-time close loans, these combine construction financing and the final mortgage into one closing. Fannie Mae’s guidelines for single-closing construction-to-permanent transactions explain how the loan converts once the home is complete.
Construction-Only Loans
These cover the build alone. When the house is finished, you take out a separate mortgage, which means two approvals and two sets of closing costs, but sometimes more flexibility.
Government-Backed Options
Some borrowers may qualify for programs that include construction financing, such as certain VA options for eligible veterans. The VA home loan program and the Consumer Financial Protection Bureau’s overview of different kinds of home loans are good places to compare options before you talk to a lender.
Why Your Lender Cares So Much About Your Plans
With an existing home, an appraiser walks through the house and compares it with recent sales. With new construction, there is nothing to walk through. The appraiser values the home as it will be when finished, based on the documents you provide. This is often called an appraisal “subject to completion.”
That means your plans directly affect how much the lender will lend. If the plans show an unfinished basement, the appraisal will reflect that. If the specifications are vague, the appraiser may assume basic finishes. If the square footage on the plans does not match the builder’s bid, the lender will ask questions before moving forward.
What Lenders Typically Ask For
Requirements vary, but most construction lenders ask for some version of the following.
A Complete Plan Set
This usually includes a site plan, foundation plan, floor plans for every level, exterior elevations, building sections, and roof or framing information. A single floor plan sketch is rarely enough. You can open one of our finished home plan sets to see what a complete set looks like, and our guide on how to read house plans explains each sheet.
A Specification Sheet
Sometimes called a description of materials, this lists what goes into the house: foundation type, framing, roofing, siding, windows, insulation, heating, flooring, cabinets, and fixtures. It tells the appraiser the quality level of the finished home.
A Builder Contract and Itemized Budget
The lender wants to see who is building the house and what it will cost, broken into categories such as site work, foundation, framing, mechanical systems, and finishes. That budget typically becomes the basis for the draw schedule. Our breakdown of what it costs to build a house in Cache Valley shows the main categories.
A Square Footage Summary
Lenders and appraisers want a clear breakdown of finished living space, unfinished basement, garage, and covered porches. Each is valued differently, so the plans should label every area and total it clearly. We include this summary on our plans so the numbers match from the first bid to the final appraisal.
Lot Information
Expect to provide the deed or purchase contract, a legal description, and sometimes a survey. Some lenders may count land you already own toward your equity, so ask about that early. Our guide on how to choose a lot in Cache Valley covers the site factors that also matter to lenders.
Permit-Ready Documents
Some lenders want to see that the plans can be permitted, or that a permit has been issued, before funding. Plans that meet Utah building codes make that step easier, and you can review submission requirements with the Cache County Building Department or your city.
Common Plan Problems That Delay Construction Loans
- Incomplete plans. Missing elevations, sections, or a foundation plan.
- Square footage mismatches. The plans, the bid, and the appraisal each show a different number.
- Vague specifications. “Standard finishes” tells an appraiser very little.
- Changes after appraisal. Adding a room or finishing a basement after approval can require a new appraisal and lender sign-off.
- Stock plans that do not fit the lot. Plans that need major changes for local code or site conditions slow everything down. Read stock house plans vs custom home design for more.
Several of these appear in our list of custom home building mistakes Utah homeowners regret.
The Right Order of Steps
Families often ask whether they should get plans or a loan first. In practice, the two run side by side, but this order works well for most of our clients:
- Talk with a lender to understand your budget and what they will require.
- Secure your lot.
- Complete your custom plans and specifications.
- Get a detailed bid from your builder based on those plans.
- Submit the plans, specs, and bid to your lender for appraisal and approval.
- Close the loan, pull your building permit, and begin construction.
Many Cache Valley families finish design over fall and winter so the loan is ready for spring. Our article on the fall building season in Cache Valley explains why, and our permit to move-in timeline covers the full schedule.
How Professional Plans Help Your Loan
A complete, code-compliant plan set gives everyone the same information. The builder can bid it accurately. The appraiser can value it confidently. The building department can review it without repeated corrections. That consistency is what keeps a construction loan moving.
Professional drafting is also a modest cost compared with the loan itself. We charge $0.80 per square foot for main living areas, $0.40 for basements and second floors, and $0.20 for attached garages. For a home with a 2,000 square foot main floor, a 2,000 square foot basement, and an 800 square foot garage, drafting comes to about $2,560. See our custom home design cost guide for examples.
Frequently Asked Questions
Can I get a construction loan without final plans?
Some lenders will pre-qualify you, but final approval generally requires complete plans, specifications, and a builder bid.
Can I change my plans after the loan closes?
Small changes are common, but major changes may need lender approval and could affect the appraisal. It is best to finalize the design first.
How long does it take to get plans ready for a lender?
Most custom plan sets take four to eight weeks, depending on size and revisions. Starting design while comparing lenders keeps both moving.
Do lenders accept plans from a drafter rather than an architect?
In our experience, yes. Lenders and appraisers look for complete, buildable plans, and Utah generally allows residential drafters to prepare plans for one- and two-family homes.
Get Your Plans Loan-Ready
A construction loan is only as smooth as the plans behind it. Complete drawings, clear specifications, and consistent square footage make approval easier.
Poulsen Home Design has drafted custom homes in Cache Valley since 1997, and Mont and Mary-Ellen Poulsen spent years as general contractors before moving into design. Explore our home drafting services, learn about new home construction, or read how to prepare for your first meeting with a home designer.
Ready to get your plans lender-ready? Call or text (435) 512-5852 or contact Poulsen Home Design for a free consultation.