Will I get approved for Construction Loan?!?!

[pdpsoccer]

I'm a little new at this and over the past two years I have worked to increase my credit score. I am currently looking to be approved for a construction loan and I am unsure if I will qualify based on my credit score. Here is the following information I have on my credit score....

FICO - Equifax - FICO 8 - 680

Wifes - Equifax - FICO 8 - 788

Annual Income (Myself) - $83,600 - I have been at my job for the past 3 years. W-2

Annual Income (wife)   - 42,000 - My wife has worked at her job for the past 10 years

My Monthly expenses are: - Car - $501  Insurance - $115    School Loans - $262

Wife's Monthly Expenses are: -Car Insurance - $102

Savings: $20,576.00

401k: $19,875.00

My credit score is showing a major delinquency and collection from 2010 - which I paid off in October of 2015. I am in the process of disputing the collection because it was a medical bill and I had health insurance at the time and for some reason the hospital did not submit a claim for my service. At any rate, the collection was for $323.00 which I paid off this October. I also had school loan accounts that were 30,60,90,120 days past due back in 2011. Which have been paid accordingly and on time from late 2011 to the current time in 2015. 

We are looking for a $330,000 construction loan. We have purhcased the land which we recently had appraised for $144,000. We owe no money on the land. Any help would be greatly appreciated. I was speaking to one bank and they said they could not give me the loan because my score needed to be at the least a 700. 

Thanks.

[Anonymous]

Construction loans are more difficult to approve, having said that you should be able to find a agency to get this done.  Score could be better, but that is not all they look at.  You have a good income, and you own the land outright - good things.

I'm not a expert but I built a house this year, and moved in last June, and they're loaning money on alot less file than yours.  Check around.

[mynameainttracy]

We spoke to a lender about a construction loan last year. They wanted 20% down, which we couldn't do. Since you own your land outright it could probably be used as the 20%. Construction loan lenders are harder to find. Talk to your builder, they should know who does them in your area.

[StartingOver10]

OP, remember that your FICO 8 score is not used by mortgage lenders.  Pull your mortgage scores here. You can get them on the 3B report. If you have that report already, theen look at the section for mortgage scores. Read the sticky at the top of the page for the explanation about FICO mortgage scores. 

The builder will have lenders that he has already used in prior construction jobs. The lender has to approve the builder and his qualifications as well as approve you, even in a construction perm type loan. So as stated above the best place to start is with your builder and his lender recommendations. 

Note, this would be different if you were getting an end loan rather than a construction loan.

[Anonymous]

To get the loan u will probably need to have a proposal of cost to build.. Typically they will fund according to progress of work.. Meaning in steps of completion and not just cut u a whole check for 330k

[pdpsoccer]

Thanks to everyone for all of the information. I started with the bank that the builder uses and they stated that they cannot approve me unless I had a Credit Score of 700. Now I'm off looking for other banks to provide me with a construction loan. I already have a cost proposal from the builder which is what I used to support my request for the construction loan in the amount of $330K. I will try my hand at other banks I guess. You would think with the amount of equity I have (144k worth of land) plus the addtiional savings I have to put down and the fact that my wife's credit score is well above 700 that we would be a good candidate. It's difficult for me to see how a bank denies me with equity that is almost half the amount of the loan and the additional savings we have to put down. Then again I am not surprised. 

[Anonymous]

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@pdpsoccer wrote:

Thanks to everyone for all of the information. I started with the bank that the builder uses and they stated that they cannot approve me unless I had a Credit Score of 700. Now I'm off looking for other banks to provide me with a construction loan. I already have a cost proposal from the builder which is what I used to support my request for the construction loan in the amount of $330K. I will try my hand at other banks I guess. You would think with the amount of equity I have (144k worth of land) plus the addtiional savings I have to put down and the fact that my wife's credit score is well above 700 that we would be a good candidate. It's difficult for me to see how a bank denies me with equity that is almost half the amount of the loan and the additional savings we have to put down. Then again I am not surprised. 

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Construction loan is a different ball game.. If u were to get a loan for a house already built. U would of gotten loan and into house already.. Reason is even if u have 40k cash and land paid off that's all u have.. Bank lending to u is taking a big risk. If they were to lend u u and don't complete the project or have additional cost from builder where r u going to get funds?? If no fund house doesn't get built. The money that bank loaned out so far is gone.. Seen lots of those in California during the high time in 2006. Where houses being built all over the place and not being completed. Ppl I know that built houses from ground up typically take out equity line of credit from an existing house or business line of credit.. After they done building they refi house and take out cash to pay off other loan