Are construction loans harder to get than other mortgages?

[Anonymous]

I am credit rebuilding. My husband and I are interested in eventually moving closer to our jobs. We have a combined income of $144K. I am working on my scores and there is no real rush. I just want to be able to obtain the best interest rates even if that means staying put while I get my scores up. 

My question:  Is there greater difficulty in obtaining a construction loan over a mortgage for an existing property? I am just now seeing houses out there that I am intersted in buying and since I intend for this to be my "last" home, I am starting to think it might just be better to build. Is the qualifying process more difficult when one is building?

Any thoughts? I would like to keep the totals costs at $325-$378K if possible.

[mynameainttracy]

I recently had a conversation about getting a construction loan with a mortgage person at a small bank where I live in PA. He said they have to have a minimum of 20% down to start. For us that just wasn't an option. We ended up going with a new home builder in a subdivision that only required a 5% deposit upfront to build.

Other than the 20% I don't think it would have been any harder to obtain than a regular mortgage. For our area he did mention that not many banks did construction loans anymore. I don't know how true that is, may just be our area.

[Anonymous]

Thank you for your reply. 

I have a friend that just built a beautiful new home over the summer and I asked her about her "construction" loan and she said she had no info because she and her husband pais CASH!!!!! That is amazing and I hope to be in such a situation someday!

We have a local builder in a housing community that does the same as you described. This might be the route we will go. I just found a housing plan that I like and houses start much lower than I initially planned. I am trying to avoid the PMI with a 20% down payment, but we are not quite there yet.