Hubs credit score is 739 mine is 617 (mid) 30k to put down. Approval for a new construction loan a possibility?

Asked by Begjen, 42104 Wed Jan 26, 2011

Would we be able to obtain a mortgage together to break ground on a new house? Looking for a construction loan amount of around 237k. Our combined income is 135k per year with 6 years work history and our debt ratio is virtually nothing. The only sticky thing is we'd like to keep our current house as a rental. Close to 130k value.

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Lynn Davenport’s answer
Lynn Davenpo…, Other Pro, Bowling Green, KY
Wed Jan 26, 2011
Construction loans have become a little more difficult to do. Most require 20 to25% equity. Purchasing a new home turn key would be much easier to do. We often build custom homes using our credit and have a turn key price at the end. If you would like to discuss a custom built home, please give me a call. Lynn Davenport agent. 270-792-6223.
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Syndi Chesser, Agent, Louisville, KY
Wed Jan 26, 2011
Dear "Begjen,"

The challenge here will be your credit score at 617. For conventional financing, most lenders these days are looking for a minimum of 720 as a mid-score. The underwriting criteria are even stiffer for construction financing, as the risk is generally perceived as greater for a lender than would be the case in purchasing an existing home. I suggest that you talk with a couple of well-established builders in your area and find out which banks and mortgage brokers these builders use for their custom-building clients. Lenders who routinely do new-construction financing are where you want to be and who you want to be talking with to help you analyze your options. Other than your credit score, which is not bad, but just not as storng as lenders are requiring most of the time these days post-banking meltdown, your financial parameters look solid -- all the more so if you happen to have good equity in your present home that you'd like to keep as rental investment property. Hope this helps you and your husband. Best wishes in pursuing your dream home!

Syndi Chesser, 100% Club, Broker Associate, Builder
Senior Partner - Chesser Meade Group
Accredited Buyer Representative (ABR)
Certified Distressed Property Expert (CDPE)
RE/MAX Associates of Louisville (Kentucky)
O/C: 502.222.9167
Fax: 502.222.9030
0 votes
Larry Osborne, Agent, Bowling Green, KY
Wed Jan 26, 2011
Think I can get that done!
0 votes
, ,
Wed Jan 26, 2011
I would try a local bank. If you keep your current home they usually like for you to have 6 months reserves for your current home and 6 months reserve for new home. Debt to income ratio will have to be under 45%

Basically you are going to have to qualify with both house payments counted against you. To include as a rental income, you will have to have a least one year to include in your income for a loan application.

I would help you but I don't offer consturciton loans. Usually your local bank or credit union is your best best for construction loans

Good Luck
0 votes
Larry Osborne, Agent, Bowling Green, KY
Wed Jan 26, 2011
I can get you one tomorrow!!
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