USDA construction loan -Diary

[Yayme]

I'll use this as a diary of my progress.  There really arent enough experiences documented about this type of loan.

I am wanting to build a home from a plan I'll buy online (I like victorian houses) on some land I'll buy with the loan.

I read every document that was out there about this loan. Looked at training slides for orginators online, read through the manual, read every piece of publicly available information I could to make sure I knew how this worked and so I wouldn't be caught out flat footed.

I double checked the area I wanted to buy land in to make sure that it qualifies.

I used the USDA website to find lenders who do USDA construction loans. There are only 2 in virginia. 2 months prior to me being ready, I called and asked a lot of questions and specifically asked them for their overlays.

To start my credit score was in the low 600s. You need a 640 to be able to go through automated underwriting and the lenders really don't want you to start an application until you get there. I suppose I could have pushed for a plan to raise my score but after following this forum I already knew what to do. I was stuck for a bit at 631 as a middle score. I then settled a conn's account that I really didn't want to touch because it falls off next year but whatever. It did nothing for my fico 8 but bumped my mortgage score to 649. So now its 649, 649, 622

I applied for the mortgages for those two lenders and uploaded all my docs and called back the loan officers I had spoken with earlier to let them know it was there. Now we wait.

I may have one hiccup and thats my income. I'm overemployed and I became so to make sure I could pay all my debts off or down and clean up my credit. The second job is a temp job so I don't know if it'll count when deciding if I'm over the inccome limit or if they will go from  my taxes last year which has me within the limits. This situation was not in the training guides.

As things happen, I will update and I hope that whatever experience I may have will be helpful to someone else.

[805orbust]

Question, will you be purchasing the land with the USDA loan as well?

[Yayme]

Yes, thats the plan.

[805orbust]

Wow... didn't know you could do that. Very interested to see your outcome. Grabbing popcorn. 🙂

[Yayme]

Its not only with USDA you can buy land and build. You can also do it with FHA.

[805orbust]

Interesting. Had no clue about this.

[Yayme]

Well it looks like we have a couple of snags.

1. There is a repo on my credit. It is from 2017 (first date of delequency 2016) and hasn't been reporting since it happened. Its just sitting there. Apparently it still has the amount I used to pay on there as well. I am working with people besides the USDA LO (keeping my options open). They have included that as a payment because its still on my credit which raised my dti and lowered the amount I can get significantly. It would have fallen off next year. I called the credit union for the auto loan and asked how to get it taken off. they told me to file a dispute. 

2. I was basically told they couldn't build a my victorian house for the price I wanted. It would be in the 500k range. Its just me and I'm not making that kind of money. I told the builder what i liked about it and we agreed to have me come in and sit and see what we can put together in my budget, because yeah, no.

[dragontears]

To answer specifically your question on income. 

You can only use part time/second job income if you have been doing it for 2 years otherwise they will just use your normal income for DTI purposes. Eligibility for the program may be different, I don't know as I don't qualify for USDA loans so haven't spent a lot of time researching it. 

[Yayme]

Update: disputed the old repo with transunion via creditkarma of all places and it was deleted in less than a day. Have put in a dispute with experian. nothing yet. have to mail a dispute to equifax because I'm somehow locked from the myequifax site and the automated system which bars me from being able to talk to anyone. It's super annoying.                  

[Anonymous]

Do you have any further updates on this? I'm strongly considering this route myself.