Hi sarahd,
Like sunrise laid out, qualifying for the construction loan would depend on a lot of variables, including your income (and your husbands adjusted gross income for 06 & 07), your monthly debt payments, how much is owed on the lot & how much it's worth, how much will the construction project costs run, how much would the home appraise for today if it was completed, and what is on your husband's credit report that is bringing his scores down to the mid 600's. Construction loans are getting harder to qualify for because home values are going down, meaning that when the home is completed, it might not be worth as much as when construction began... with the lender's collateral value declining, they are more reserved in who they'll make construction loans out to. Your husband, being a builder, will have to qualify in order to build the home... which is called an "owner builder" program. They usually want to see a track record of past homes he has built, along with references to sub's he's hired, etc. Most lenders don't permit owner builder's, but there are still some that do. I know with IndyMac Bank they will require a 680 score from the primary wage earner, but they do have an owner builder program. IndyMac is also having some financial difficulties, so that might be a reason to be cautious of them. Flagstar is another good construction loan lender, but from my recollection they do not have an owner builder program. If Citi's program fits your guys credit & the fact that you want to owner build, they might be a frontfrunner for your situation. I'd also contact local lenders/CU's as well, as they could have special qualifying construction programs, and since they are in your "backyard" so to speak, they might be more accommodating to have your husband build the home.
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