I have been approved for mortgage. I am going to try to get a construction loan. I will have 20%+ equity if they use loan to appraised value, but only about 10% if they use loan to cost. Does anyone know which method banks are using. Lot is free and clear, income is $100000, debt to income with new home would be 19% and fico of 688 mid.
Construction loan programs are unique to the bank offering them, so your most accurate answer will be from the loan officer who gave you the loan approval. I am not aware of any PMI providers offering mortgage insurance on construction loans, so hopefully they use loan-to-value. Back when credit was super easy the more popular construction loan lenders went off the loan-to-value, but those lenders are no longer in business (IndyMac, National City).
Helping people with mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime, Construction, Renovation/Rehab, Commercial) since 2002 Located in Orange County, CA and lending in all 50 states