FHA and VA Construction Loans Guidelines – These are the easiest programs to qualify for. You must have a minimum 620 middle credit score. If you have had a Chapter 7 bankruptcy you can not apply until you have been discharged for at least 2 years. For a Chapter 13 you need one year of paid as agreed payments and your Trustee’s approval. A foreclosure means you have to wait 3 years for an FHA loan, 2 years for a VA. The published guideline for debt-to-income 43% but higher rates can be approved if you have compensating factors. FHA requires a 3.5% down payment, VA is 0% down.
Conventional Construction Loan Guidelines – Conventional requirements are a little tougher. You will need a 680 credit score. The waiting period after major credit issues is longer, 4 years after a bankruptcy, 7 years after a foreclosure. The stated debt-to-income is the same, 43% but again, higher rates can be approved with compensating factors. You will need a minimum down payment of 5%.
High Balance Construction Loan Guidelines – In 2022 the standard Fannie/Freddie max loan amount is $647,200. In some “high cost” areas the max loan amount is higher. Call me for the latest numbers and requirements.
Oher key factors –
*Self Employment – Your income will be mostly based on the net income you claimed on your taxes for the last 2 years. Non-cash expenses such as depreciation and depletion can be added back to your income. Keep in mind that about half of the per mile auto expense is for depreciation.
*Unique Homes – The home you plan to build must be common for the area. If there are not at least 3 sales of a similar homes, in your area, in the last year, it is unlikely you will find any lender willing to lend you money to build your home. The smaller you down payment the more you have to watch this. Find out more on my blog site, https://activerain.com/blogsview/5194427/you-can-t-build-this-kind-of-home-with-the-fha-va-ctp.
*Excessive Land – if you are building on a parcel that is larger than what is customary in your area, the appraiser may not be able to give you credit for all the land value. Again, look at the sale comps. How much land are they built on? Find out more here, https://activerain.com/blogsview/5191365/land-values