The costs are the costs—foundations, lumber, and core building components do not get cheaper just because it is an entry-level product.

This only takes into account the monthly payment you're trying to buy and in essence you do backwards math till you work your way into a maximum loan amount or purchase price usign this 46.99%.The backend of 56.99% or 10% higher than your front ratio of 46.99% just means you have 10% of your monthly gross income for all your other debts like car loans monthly student loans credit cards etc (other debt basically), you cannot exceed this otherwise it will reduce your front ratio vice versa (IE if your back end stuff is 20% that only leaves you 36.99% for our front ratio = total of 56.99%).You can payoff debt, get a raise at your job, you can buy down your rate, get a cheaper insurance quote, have your brother refinance your car off your name, etc (strategies to reduce your DTI to increase your borrowing power).

A lender offering WSJ Prime + 0.5% may appear cheaper than one charging Prime + 1%, but if the “cheaper” lender makes construction administration too rigid, that loan will ultimately cost far more over the duration of the project. 

This can significantly reduce or eliminate your 2025 taxable gain.

I was thinking continue this with another cheaper property in the future.

If a lender is involved, closing in your personal name is often simpler and cheaper, then you can transfer to an LLC or land trust later if allowed.

Hi @Zaid Akrem, You’d usually return his initial investment as a capital repayment, that part isn’t taxable.

Your taxable gain would be the sale price ($250K) minus your adjusted basis (purchase price $200K + $10K improvements = $210K), so $40K is correct.

This is sort of the "easy way out" where I'd be living cheaper and have a place up until my training.Option B: I go through with finding a house hack in the area (possibly rent out to/with my brother and his girlfriend?)

Many of them only attract unreasonably CHEAP owners who will immediately fire you if they find someone else cheaper or you won't capitulate to their cost-cutting demands.