Ben wanted to build a new home using his VA benefit, but would not have a place to live if he sold his existing home. He was carrying a lot of consumer debt. This deal needed some extra attention.
The Situation
Credit score: 649
He owned a home already wiith plans to sell in 10 months after his new home construction is complete.
Ben had $50k in consumer debt affecting his credit and DTI.
He owned the land he wanted to build on.
His existing primary home loan was a conventional loan, so there was no issue with remaining VA entitlement.
The Challenge
Ben’s bank didn’t do VA zero-down construction loans.
He owned his land, but his DTI and credit didn’t work for a bank construction loan
His builder had never done a VA construction loan, which has a slightly different structure than a conventional loan.
The DTI and residual income were just too high.
AUS referred (DU & LPA), so manual underwrite.
How We Structured It
The first thing we did was get him a HELOC to pay off his debt. He needed to have some cash reserves on hand and to improve his overall DTI. That HELOC was closed in about a week.
After paying off the debt, we waited a month to repull his credit. The scores went up to 679, but we were STILL getting AUS (DU/LPA) refer findings.
I coordinated with the builder to roll in the closing costs on the builder’s purchase contract using builder/seller concessions so Ben was into the deal for zero down.
We’re manually approving the file and ignoring the PITI on his departing home because VA guidelines allow us to use market rental rates to offset his payment. Now he can sell later without worrying about it.
Why This Might Matter
VA construction loans are a specialty product. Many banks and credit unions don’t offer these.
HELOC’s may not be available at some banks and credit unions with only a 649 score and some open collections.
Pattern To Watch For
Veteran with decent credit.
Wants to build a home, but may need to sell their home after the home is built.
It’s easier if they own the land already, but we can roll land purchase into the VA construction deal if necessary.
Work With Me
Do you have a deal that doesn’t fit your “buy box” but the client seems solid?
Reply to this email or call me at 616.298.2743 for a prompt 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