Construction Loan?? I need advice...

Anonymous · ‎09-03-2008

My husband and I are wanting to build in the near future. We have about 2-3 acres in the Texas Hill Country that will be deeded to us from my parents (it's on their land). We are currently working to repair our credit and hope to apply for the loan next summer. We want to have the home done before February 2010. We hope to be the general contractor and build most of the home ourselves. We believe we will be able to save money and use our resources (my husband is an electrician and works with many subs/companies that are willing to help us out with the work). What loan should we look into applying for? How would we go about getting a loan to build our house? This will be our first home and I am just a little confused as to what we are getting into as far as loans go. I'm honestly too embarrassed to go to a bank or contact anyone because of our credit. His score is 605 and mine is under 580. Can we qualify? We are looking to borrow about $120,000. Anyone's help is greatly appreciated.

Anonymous · ‎09-03-2008

You will have to hire a general contractor as banks will not do a loan without at GC and you can not be the GC.

Also, You will probably need to be at 620+ credit score and 12 months clean credit.

ALso, you will need a large down payment more than likely 10%+ or maybe even 20% (although the equity in the land may offset some of this.

southernficoaddict · ‎09-14-2008

Not true... Our local bank will allow you to GC your own home if you have had experience with that sort of thing before.

Anonymous · ‎09-14-2008

While I am sure there are banks out there that are still doing owner GC loans, very few are. All non standard home loans are under extremely tight controls and restrictions right now. With cost fluctuations and higher risk, owner GC loans for constructions are very hard to come by if you can find one at all. Also, even if you do, you will pay for it. Anything that increases the risk in this market is going to increase the cost. Again, you might be able to luck out and find one, but it will be a lot of work to find one and get it funded and you will have little choice as to what bank or the terms. they will expect a high FICO, high reserves, high DP, and proven history as a GC more than likely even if you find one.

I say this from personal experience as I have a friend and a family member that spent 2-3 months each trying to get constructions loan for their houses they wanted to build. One had even owned and operated a construciton company a few years before, the other was a licensed plumber and electrician who has done full custom house builds and full home remodels. They got financing, but it was not easy or pretty.