The builder of record should prepare it?

Your builder should prepare it.

My lender used my purchase contract (but I was doing a fixed price contract so not cost-plus) and then did an appraisal based on comps to determine what they would lend on my construction turned permanent loan.

I also don't know why you can't give lender detailed one; they don't necessarily care you picked grey painted cabinets instead of stained maple, but if it provides an estimate of costs to build it is not like it is harmful to you to provide it.

"he mentioned that the one we give the lender doesn’t have to include every thing"

I consider this to be a RED FLAG.

If he gave you a detailed estimate, submit that. It will help the bank review your percentages for each portion of the build, and they will likely tell you if he underbid things (eg allowances) to make it appear that you can afford the home, when in reality, he has underpriced things so badly that you may have difficulty getting all the funds you need from the bank, especially if things go wrong.

Tell him you want to submit the entire thing, and see how he reacts. Then if you have allowances in your contract, go down to the store (BEFORE you sign anything!) and see how much those allowances will buy you...

yes - as lookintomyeyes83 wrote the builder telling you this is a red flag.. and tbh i do not think your lender will accept an excel spreadsheet you make as that is not actual from the actual builder. Please call your lender and ask what their requirements are and to give it to you in writing.

Lenders who know their stuff will hand you their standard document and/or excel/pdf file to give to the builder. Typically it is based on cost breakdown formats originated by FHA 60+ years ago.

Often the builder becomes party to a construction loan by providing signed supporting documents.

Online average cost estimates lead to many failures. Shown in the site for example: 2800sf home Trusses $3800.... that might buy enough trusses for a garage.... I'd figure $15-20K in my market. Besides, a 2019 build is 4 years later than the data provided which was US average production building costs in 2015.

Your builder telling you that lenders don't require a detailed cost breakdown is most definitely NOT a red flag. Most lenders are set up to "check the box." In my experience, lenders will have a standard form they want your builder to complete. It contains a whole lot less detail than is needed to accurately estimate the cost to construct a home.

The problem is that some lenders will use their form as the basis for making construction draw payments which can lead to substantial under/over payments.

As an appraiser, I tend to see lender forms. It's a boiler plate form. The constructions draw form is broken up into five to seven segments. The number depends on the complexity of the project. They are very broad in scope. Get one of these and submit it to your builder. If there is an item that he will need a very large payment very quickly, he can make sure it's placed in the right section. Most of the time, these sections/draws will be a percentage of the build.

Sometimes when I am called out to do a construction draw, I may be called out again two days later as some new section is completed. Then, I may wait for three months before I get another request for a visit. There have been occasions where I have been able to complete two draws on one visit. This saves the owner some money. But, it's not common.

The urgency of the draw is driven by COD orders such as framing packages and how much working capital is in the builder's bank account. Generally, they don't like to extend credit and want quick payment.

Good builder's will be completely familiar with the process and will make certain to get the lender in the loop as to their expected requirements. Every job is a little different, but very similar. I know that's contradictory. But, there is a system to this process.

Your job will be to make sure the builder has been given the form, that it is completed and returned to the lender. Ask them for it. Then, you need to follow up with the lender and make sure they are happy with what they received.

It's your home, your money and your debt. Be proactive. Ask questions and get follow-up answers.