What's a good product smaller than a construction loan?

Question

I'm going to be constructing a single family but the loan amount needed will be far lower than a construction loan will allow, $70k of financing will be required and lender I spoke with said no lender would loan below $200k. I have excellent credit and when it's time to borrow will have 35-40% down.

What type of financial products are available with these constraints? I'm early in the game of researching finance and need to find what type of product to call the lenders about.

What type of financial products are available with these constraints?  I'm early in the game of researching finance and need to find what type of product to call the lenders about.

Bill Gulley · Answer

Welcome to BP!

You should have no problem with a 70K construction loan as far as the dollar amount borrowed! I suggest you not get advice from that person anymore, that was nuts.

To build a home you need a construction loan, so you are correct.  :)

Linda King · Answer

Hi Ryan - I also agree with Bill & Dion... Especially if you have good credit, you should be able to walk into a construction loan without a problem with a traditional loan or private loan!

Either way - Come back to the post and let us know what happens! You never know, you might help someone else out with what you find!

LK

Ryan Pierce · Answer

Thanks guys, I wanted to make sure I didn't make a 2nd call from a point of ignorance.  That's great to hear, I figured there would be a floor but $200k did seem oddly high.

It actually was a credit union that I called first.  Maybe the guy was new but it was specifically their real estate line.

I'll start calling tomorrow, a mix of big, small, and specialized lenders.

Thank you once again.

Dion DePaoli · Answer

Yea, I agree with Bill, who ever informed you on these matters is off the ranch and doesn't seem to know what they are talking about.  The prevailing minimum loan amount for construction loans is $50,000.  That you will find at most of the larger investment banks such as Wells and BOA, etc.  
	
	If you place a couple calls to some local credit unions or smaller community banks you may find that loan minimum relaxes below $50k in some cases down to $35k.  
	
	Tell those folks, 'excellent credit' with 40% down, they will find a way to get you a loan, trust me.

What's a good product smaller than a construction loan?

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