If you want to know what lenders are looking for in order to give you financing, then you've come to the right place.

Reputable lenders are primarily interested in getting paid back and don't want to repossess your property. Having to repossess and finish a project is time-consuming and distracting.

Most lenders sell loans, which means they are looking for qualifications that will allow them to sell your loan and continue with liquidity so that they can originate and service more loans.

This means they are following the guidelines and qualifications presented by at least one, if not a dozen, secondary market note buyers, each with different tastes and preferences.

Generally speaking, experience correlates the most to getting paid back, so lenders will look at your track record. If you have done multiple "like" projects recently, then you are probably fine. That is to say, if you are seeking financing for a fix-and-flip with a cosmetic rehab budget, then you've done multiple fix-and-flips with cosmetic budgets in the last two years.

If you are looking to do a ground-up construction with a budget of $800,000, and all you have done in the past are low-dollar flips, then you will have to find a way to reconcile this delta. Typically, this means you should probably partner with someone more experienced or hire a general contractor who specializes in that particular area.

Even if you don't have fix-and-flip experience, you can make a case that you are experienced if you have been in the real estate game for a long time. This includes contractors, subcontractors, real estate agents, real estate brokers, or even those who have maintained rental properties.

Lenders will also look for liquidity. No one wants to take on a borrower who can't afford to come up with construction dollars before they are reimbursed. They also want to make sure that every borrower is able to make their payment in a timely fashion.

Lenders will be looking for you to have a certain percentage of your budget available at all times to draw from before you get reimbursed, and they will be looking to see that you have enough reserves to make payments, usually between six and nine months.

Credit is still the number one indicator of default, and we have discussed the importance of this in the other post. If you have a credit score of less than 650, you will be relegated to true hard money loans with low leverage points and extremely high-interest rates. It is in your best interest to maintain a high credit score at all times.

At the end of the day, a lender wants to know that you know what you're doing and that you are going to pay them back.