Bryce owned a small lot in the city and wanted to build a 2-unit/duplex as an owner-occupied home. Great credit, looked like a good deal, but the appraisal at his bank came in short.
The Situation
Credit score: 729
Solid income, well-qualified across the board.
Initially planned for 20% down conventional construction at his bank.
The Challenge
Bryce came to me after the appraisal came in low at his bank (conventional loan)
The total cost of his project was ~ $545,000 but the bank’s appraisal came in at $440,000. As it turned out, the comps for 2-unit duplexes in his market were few and far between.
How We Structured It
FHA One-Time-Close (OTC) Construction loan at 96.5% LTV.
We ordered a new FHA appraisal using the builder specs and plans. The value came in the same as the conventional appraisal had. There were limited comps, some being distressed sales, so the value on paper was lower than it should have been.
The FHA max loan amount at $424,600 was close to his original conventional application at $436,000. Fortunately, he was able to make up the difference.
His payment for FHA was similar to his expectation on the original conventional loan. Of course, FHA has annual/monthly MIP, but FHA had a better rate than conventional so the payment was about the same.
The deal closed successfully and his construction will be done in 8 months.
Pattern To Watch For
Clients who want to build and can’t go conventional for one reason or another.
They own land, or it can be gifted from a family member, or they have 3.5% or more for down payment on the entire project.
620+ credit scores. We can go lower if the deal makes sense.
Work With Me
Do you have a deal that doesn’t fit your credit policy but the client seems solid?
Reply to this email or call me at 616.298.2743 for a same-day answer.
What I Specialize In
HELOCs (complex income, credit issues, or property condition challenges)
VA loans with high DTI or non-traditional income
Low credit scores with compensating factors (equity, down payment, strong income)
Recent self-employment with documentable income
Non-QM and investor DSCR loans
Construction loans (especially investment property, FHA/VA construction, or large renovation projects)
What I Typically Don’t Do
Manufactured homes under $150K loan amount
Raw land purchases
Construction loans under $300K
One case study per week showing scenarios we’ve been able to help with