Posted on: 30th Sep, 2008 12:54 pm
I have been trying since April of this year to get a construction loan. I am currently employed with a gross annual income of $57,000. My credit score is 800 but I am unable to get a construction loan due to DTI. I have two lots to build on and am at the current time trying to sell one of them. All I owe on is my current mortgage and the two lots for a total of $1200 yet I am unable to get a loan. I have been to 9 banks/credit unions this year and they all turned me down. My DTI (so I am told) is 54% and no one will even talk to me until my DTI is under 50%. My excellent credit isn't even helping me. I want to build a new house and retire but don't dare retire until I get a construction loan. I am very frustrated and now I have decided to wait until 2009 and try again but with the way things are going, I don't know that I will ever get a construction loan. Any advice would be greatly appreciated.
regrettably, vicki, you have become "victimized" by the mortgage/credit "crisis." it used to be that someone with a score as high (or nearly as high) as yours could be approved with a ratio as high as 64%. alas, no more - the easy credit of the past has led to the exceedingly hard credit of the present and the foreseeable future (next week).
and you are correct in not wanting to retire until your loan is in place. less income will only hamper your chances.
if you can squeeze that ratio down a couple of percentage points, it might be worth trying; but if you've been told 50% is the threshhold, then i would shoot for that. paying down whatever you can as quickly as you can will help you.
there's little else to say - construction lending is riskier than conventional borrowing, also, so all the lenders doing them are going to be even more conservative than you and i think.
and you are correct in not wanting to retire until your loan is in place. less income will only hamper your chances.
if you can squeeze that ratio down a couple of percentage points, it might be worth trying; but if you've been told 50% is the threshhold, then i would shoot for that. paying down whatever you can as quickly as you can will help you.
there's little else to say - construction lending is riskier than conventional borrowing, also, so all the lenders doing them are going to be even more conservative than you and i think.
Hi vickiharris!
Welcome to the forums!
Yes, easy loans are hard to get these days. Moreover, the construction loans have become a risky business for the lenders so they take a lot of precautions while agreeing for that. Try and bring your DTI below 50% which will definitely be the best option for getting the loan. As you have still not retired, i think you have a fair chance of getting the loan if you can bring the DTI below 50%.
Feel free to ask if you have further queries.
Sussane
Welcome to the forums!
Yes, easy loans are hard to get these days. Moreover, the construction loans have become a risky business for the lenders so they take a lot of precautions while agreeing for that. Try and bring your DTI below 50% which will definitely be the best option for getting the loan. As you have still not retired, i think you have a fair chance of getting the loan if you can bring the DTI below 50%.
Feel free to ask if you have further queries.
Sussane
Thanks for the advice. The only way I can get by DTI down right now is for that lot in Idaho that is for sell to be sold and that is out of my control. I am hoping that if the economy improves someone may want to buy that lot.