Qualify as homebuilder. What criteria does a builder need?

Question

Hello, I am in the central Texas area. I have just sold my home, and have enough to put 20 percent down on a new home. My plan is to buy an empty lot and have my father build a home on it. He has 15 years of experience before 2008. We have started a company, but have not used the company to build yet. Will the bank accept my father as the builder and loan me money to build a new home?

Ryan Todd · Answer

Banks probably won't bite. You might be able to hire a GC for a fee and bank loan purposes, but let them sub it to your dad. T.A. Todd Construction in Georgetown.

Michael Jones · Answer

Hello Antonio! I think you're going to run into issues here. Most banks are worried about a relationship because it's not "arms-length". We lend on construction loans and this is a prohibitive arrangement for us.

Not that you would do this, but what banks have seen in the past is that the builder family member will charge more than necessary to inflate the price of the home and then cut the money back to the homeowner. The bank is none the wiser and it creates problems in the banking industry. Hope that helps. Good luck!

Jim Cummings · Answer

@Antonio Rodriguez. There is only one way to find out. Put together your Financial  & Dad's Financials and start talking to Lenders. I would suggest Regional Banks. I've had good success with Re-Hab Money from Commerce National Bank (Division of Lubbock National Bank).

I don't know Temple - but would think if you have a solid viable proposition someone in the Temple - Waco area would fund it for you. Probably will want you to have "Skin In The Game" - i.e. the lot or land you'll acquire would be used as collateral.

Good Luck!