Quote:
Originally Posted by vreihen16
My understanding of the options are:
Construction loan against the new house, where everything needs to be scheduled in the construction process and the bank pays contractors based on construction milestones defined at the start of the project. I believe that you have to pay the principal and interest (P+I) from day one, based on the amount paid out by the bank. I suspect that this would be the hardest option to get for building something unconventional like a barndominium, but works fine for someone stick-building a traditional cookie-cutter house in an HOA or subdivision.
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Construction loans are interest-only (usually, I believe) till the construction is complete; then you convert to whatever loan you choose.
If you act as a GC, or have a very loose schedule/unclear plans/not sure of the final product, then yeah, bank won't like it and probably won't underwrite.