Construction loans....

[Superk88]

So over the last two years we have sold, scraped and paid off debt to where we can build a house. We were just denied a construction loan due to our Debt to Income.

I make 80k a year and we have 70k mobile home, 28k car, and a 13k unsecured loan.

The bank approved us for a 250k va loan which I am gratefull for as many people would love that, but were trying to build on our land.

We were pretty much told that because of the mobile home we can't build.

Has anyone ran into this...how can people build nowdays are you supose to rent and then build. 

We do have the oppurtunity to buy a family home with 18acres for cheap...but it's in my grandparents name and well my grandfather is deceased and my grandmother is in the nursing home.

[VAMortgageGuy]

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@Superk88 wrote:

So over the last two years we have sold, scraped and paid off debt to where we can build a house. We were just denied a construction loan due to our Debt to Income.

I make 80k a year and we have 70k mobile home, 28k car, and a 13k unsecured loan.

The bank approved us for a 250k va loan which I am gratefull for as many people would love that, but were trying to build on our land.

We were pretty much told that because of the mobile home we can't build.

Has anyone ran into this...how can people build nowdays are you supose to rent and then build. 

We do have the oppurtunity to buy a family home with 18acres for cheap...but it's in my grandparents name and well my grandfather is deceased and my grandmother is in the nursing home.

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Hi @Superk88 ,

Is the 70K mobile home on the land you intend to build on? What do you plan on doing with mobile home once your new home is completed?
What are the monthly payments on your car, the unsecured loan and the mobile home?

[Superk88]

The mobile home is attached to land but we have another acre of land we were going to use.

Home payment is $698

Car Payment is $550

Unsecured loan $280

I make 80k a year.

[VAMortgageGuy]

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@Superk88 wrote:

The mobile home is attached to land but we have another acre of land we were going to use.

Home payment is $698

Car Payment is $550

Unsecured loan $280

I make 80k a year.

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How much were you hoping to get? Do you know what the property taxes are in your area? What will you do with the mobile home when your new home is done? It's possible the lender has an overlay on how high your debt to income ratio can be.

[VAMortgageGuy]

 wrote:

The mobile home is attached to land but we have another acre of land we were going to use.

Home payment is $698

Car Payment is $550

Unsecured loan $280

I make 80k a year.

You likely have a couple of different issues.

#1) Does your local zoning/building code allow for 2 units on your lot? If so, VA should be fine with it based on this:

An Accessory Dwelling Unit (ADU) is a living unit including kitchen, sleeping, and bathroom facilities added to or created within a single-family dwelling, or detached on the same site.  A manufactured home on the site could be an ADU. The dwelling and the ADU together constitute a single real estate entity.

#2) Your debt to income ratio (DTI) maybe too high for the lender you applied with. That could be for a couple of different reasons. The lender may have an overlay (their own guideline) or you maybe limited because your application/file has to be manually underwritten. 

Your DTI right now is 23%, total debt of $1,528 divided by your monthly income of $6,666 =23%. If you add a monthly mortgage payment of $2,100, it pushes your DTI to 55%. That's not too bad as long as you meet the VA residual income requirements.

Renting out the manufacture home once you move out, could help reduce your DTI which could mean a higher loan amount for the new construction loan.