A home construction project can be the beginning of a new chapter in your family's life. While it comes with the excitement of a fresh start, it can also come with the added stress of tightening your budget and wondering how your new home will impact your savings and financial goals for the future.

On your new construction journey, understanding your options is the first step to making a well-informed decision for your wallet. If you’re ready to explore the ins and outs of new construction financing, read on for the most important factors to consider before getting started.

If you do decide to take the loan route for financing your new construction project, it should come as no surprise that lenders typically require a credit check before approving your application. The average score needed for a loan will differ widely based on the lender, but it's important to know that higher scores can lead to better interest rates and other favorable terms. If you're unsure about your current credit score, you can request a free annual credit report courtesy of the Federal Trade Commission.

In order to secure a new construction loan, you'll be required to present documentation detailing the project. Required documents are likely to include a project timeline, budget, materials lists, floor plans, and more. Typically, a builder will help create the construction plan that your lender requires.

This step is required because construction loans are considered riskier for lenders. These loans don't have collateral associated with them, like a mortgage or home equity loan does. In addition to the construction plan, you'll also have to provide documentation proving you're working with a qualified builder who has a track record of built homes.