I'm looking at buying an older home built in 1910 it needs about $40 thousand to fix it up. It sits on just under 1/2 acre, 1175 sq ft, 3 beds 1 bath. Its three blocks from the local schools only 5 minutes from the interstate and 15 to 30 minutes from a high employment cities. The owner agreed to a below market offer, because of the work needed, she longer wants anything to do with rentals. She is willing to do a owner finance because banks wont loan on it with all the work needed. My question is does anyone know if you can get a construction loan with a owner finance and than refinance into a 30 yr fixed? Thanks in advance to the BP community for all your wisdom! 

@Adam Read   Yes, you can but the seller will have to subordinate their lien to 2nd position.  Try to work with local banks or credit unions for something like this, as they have more flexibility.

Good luck!

- Tom

@Tom S. Thank you for the information I will get together with my local credit union. 

@Adam Read   No problem to assist, I've done a few deals like this.  The key is to make sure you can subordinate the seller's position to 2nd.  If there's no language in the note for that, once you close on the place and the seller has a 1st, you'll never be able to get a construction loan, at least not from a bank.  Maybe from a private lender but the terms probably won't be great.

Typically we would start with 1st position with the seller for say 5% interest.  And then include language stating if the seller agrees to subordinate should the need arise, buyer to pay $10k toward principle and increase rate to 6%.  That way a good rate is in place now, and flexibility for the future if needed.

@Tom S. I like that strategy she just may go for it. I may have to tailor it differently for this deal but you’ve given me good start. Thank you again for helping me out!! Happy thanksgiving to you