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Old 09-22-2013, 04:58 AM
 
780 posts, read 1,553,624 times
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I am a low income single mother, I have excellent credit, zero debt, a stable job and I own (paid cash) 3 acres that I would like to build on. My lease is up next spring (I rent) and I feel like I should attempt to build a home rather than renting any further. Not to say it would be done by then, but its made me think about what to do next. I just want to build a small 1200 sq ft home (that's the smallest my township will let me build), while doing as much to save as I can (like getting things off craigslist or using the help of family who can put in the electrical etc). I just wondered if anyone had any advice for me.... what to expect? If I should do anything in particular before talking to a lender? If I have any hope at all for borrowing since I'm low income? I was approved for a conventional mortgage (before I bought the land) for $70k a few months ago. I figure why borrow all that money for some piece of crap foreclosure home that would cost a ton to heat and cool when I could build something efficient for not that much more? I'm trying to learn the whole process of building a house from start to finish and plan to contract the jobs out myself. So if anyone has any advice about that too I'd appreciate it. Thanks
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Old 09-22-2013, 08:59 AM
 
4,787 posts, read 8,754,839 times
Reputation: 12592
The first thing you have to do is to figure out what it will cost you to build a 1200 square foot home in your area. You have to determine the cost of the house plus improvements. Improvements are your utilities plus all weather driveway, even if it's only gravel.

A three acre lot seems as if it might be in the country or a very suburban location. That usually means well and septic system. Can your lot support a septic system- have you had it tested ? If you need a septic system you'll need an engineer to get out there to test the soil, plan a system, get it approved
by the town and figure out where on the lot it can go. You'll also need to get estimates for its costs.

You won't know how much a well will cost until you actually start drilling. However, you can speak to local well drillers and get estimates for cost per square foot of pipe and pumps.

With that done you can begin to figure out some of your lot costs- lot clearing, preparation, if you need fill, how difficult the lot is to work ( lots of rocks, ledge, etc. ). Maybe you're lucky and it's sandy loam.

Start talking to some builders and try to get estimates on what it will cost to build your home. I would consider modular builders, which is a little cheaper than stick built. In your situation, with such limited funds, I'd also consider maybe a double wide mobile home.

When you have all estimates written down and in place, then you talk to lenders. Your best bet is local banks. I will tell you though, the banks are going to require that every contractor be licensed. Having family help is fine, as long as they are licensed for whatever work they are doing.

A lender also doesn't give you unlimited time to complete a house. A construction loan is good for a year.
If you haven't built homes before, they may require you to use a general contractor rather than doing all the co-ordinating yourself. That will add to your cost. This is very dependent upon your local area and what your bank expects. Good luck
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Old 09-22-2013, 12:31 PM
 
28,383 posts, read 67,936,355 times
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Sadly the way construction loans are structured this is very difficult maneuver for anyone without significant cash saved up.

If you were trying to buy a house in a rural area you might be eligible for a USDA loan. That is not generally a viable path for new construction.

The most common construction loans require full debt-free ownership of the land, full approval of all zoning / development authorities (and related water / sewer / utility regulations), cash on hand equal to 50% of the total estimated cost, and top notch credit history including experience with other long term debts. The OP does not seem likely to qualify for such a loan.

I might suggest exploring options with firms that sell manufactured housing -- a single or multi-story unit could easily give them 1200 sq ft or more. Often firms that sell manufactured housing have more lenient credit policies than even traditional FHA type lenders.

Current manufactured housing is very high quality and efficient. Such housing ought to last at least as long as traditional site-built housing with similar amounts of maintenance. What is a modular home - How are modular homes built | Factory Direct Homes
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Old 09-22-2013, 04:45 PM
 
780 posts, read 1,553,624 times
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Thank you both for such informative replies! I know I'm probably over my head to think I could actually have my own house built but I have to try. A couple more things:

Do they have rural loans for new construction? I googled it and saw it someplace but wasn't sure if it was too good to believe...

The land is completely debt free owned, there are homes on either side and it was 'deemed' buildable, I do have excellent credit (high 700's), and have paid off student loans and a vehicle loan. 50% cash on hand? Really? Geez, might as well just save up the rest and not borrow at all! What's the point then?

I probably SHOULD do a modular, but what I want is a post and beam strawbale with concrete slab radiant floor heating. I know, probably impossible. I just wish it weren't because regular homes are unsustainable and energy suckers

Also the lot is loamy, clear of trees/brush, pretty flat but has a slight incline going to the north end. The town is rural, and my lot is off of a paved road in the country outside of town.
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Old 09-22-2013, 06:05 PM
 
Location: The Triad (NC)
26,847 posts, read 57,851,863 times
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Quote:
Originally Posted by tjay View Post
I probably SHOULD do a modular, but...
There you go.
That, plus the cot of the well/septic and electrical service, will still add up quick
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Old 09-22-2013, 07:44 PM
 
4,787 posts, read 8,754,839 times
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Well, now you've opened a whole new can of worms. You've got big problems.

Before going any further, find a lender willing to loan on a straw bale home. In today's lender environment, with lenders so cautious, you may be up against a very thick brick wall.

Second, even if you could find a lender, now you have the house appraised. Remember those words,
" comparable sales". No appraiser is going to find three recent, closed sales of other straw bale homes in your area. In such a case, other " oddball" styles, such as rammed earth, geodesic domes, etc. can be used. But are any such things available in your area ? With lenders being so picky, strange homes is all the excuse they'll need to deny a loan.

Third, will your local building officials give you a permit for a straw bale home. Some will, some won't

Unfortunately, this may be one of those dream meets reality situation. Sometimes you build what you can afford, hope the market improves over a decade or so, build equity and keep the dream alive for the future.
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Old 09-22-2013, 08:06 PM
 
Location: Texas
5,586 posts, read 11,837,023 times
Reputation: 10545
Unfortunately tjay, your profile doesn't let anybody see where you live....and that makes a difference. You might look around in your area for a U Build It kinda company. They basically have lenders ready to help you, subs on tap to help, and you set the schedule etc. It's incredibly easy to build a home yourself. Most of your national home builders are run by bean counters that haven't the faintest clue how to build a dog house. They rely solely on the subs expertise for a quality build. So yes, you can do this. But you need a plan and not just a floor plan. I'd strongly suggest that you start by reading here:
Building Science Information Home Page — Building Science Information

Depending on the area you live determines the type of construction methodology. This site has anything and everything you need to know to build an energy efficient home. Yes, you can heat and cool a house of 1200 sq ft for less than 70 bucks a months. But YOU must set out the building specs like the insulation package, windows, the HVAC unit, the water heater, etc. and where they are installed. Down here in Texas, we fight the heat. We put most of the windows on the southside of the home to catch the spring winds. We put the garages on the northwest side as this is where our winter winds come from. We put the water heaters in the attic to pick up the heat in the attic. We also use PEX with manifolds, radiant barriers, and use R30 ceiling insulation. That may or may not be right for you though as it depends on where you live and the normal environment. But read the info at the website and learn. I'd also suggest going by construction sites on weekends and walk a few houses so you have a clue what and how the area builders assemble their homes.
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Old 09-25-2013, 02:44 PM
 
220 posts, read 710,864 times
Reputation: 112
Quote:
Originally Posted by tjay View Post
I am a low income single mother, I have excellent credit, zero debt, a stable job and I own (paid cash) 3 acres that I would like to build on. My lease is up next spring (I rent) and I feel like I should attempt to build a home rather than renting any further. Not to say it would be done by then, but its made me think about what to do next. I just want to build a small 1200 sq ft home (that's the smallest my township will let me build), while doing as much to save as I can (like getting things off craigslist or using the help of family who can put in the electrical etc). I just wondered if anyone had any advice for me.... what to expect? If I should do anything in particular before talking to a lender? If I have any hope at all for borrowing since I'm low income? I was approved for a conventional mortgage (before I bought the land) for $70k a few months ago. I figure why borrow all that money for some piece of crap foreclosure home that would cost a ton to heat and cool when I could build something efficient for not that much more? I'm trying to learn the whole process of building a house from start to finish and plan to contract the jobs out myself. So if anyone has any advice about that too I'd appreciate it. Thanks
I would suggest hire an architect to draw you up a house plan. Then get 3 quotes from builders. Select the builders that you like. Bring your house plan and the builder's bid to your bank or other local banks. See what happens.

Banks will not talk to you without "house plan" and builder's bid.
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Old 09-27-2013, 07:34 PM
 
1,263 posts, read 2,644,348 times
Reputation: 1872
There's no way you're going to get a high-LTV construction loan for a strawbale house. You'd have to skip financing and pay for a project like that in cash and trade.

You might have luck with a modular home builder, but you'll probably still need to put some money down. A trailer (manufactured home) is probably the cheapest option. You can also sometimes buy a used one for a very low price, but there will be transportation costs to move it to your site.

Don't give up on this dream, but make sure to do your homework well. Start talking to lenders and builders in your area.
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Old 09-27-2013, 07:46 PM
 
1,263 posts, read 2,644,348 times
Reputation: 1872
Quote:
Originally Posted by chet everett View Post
Sadly the way construction loans are structured this is very difficult maneuver for anyone without significant cash saved up.

If you were trying to buy a house in a rural area you might be eligible for a USDA loan. That is not generally a viable path for new construction.

The most common construction loans require full debt-free ownership of the land, full approval of all zoning / development authorities (and related water / sewer / utility regulations), cash on hand equal to 50% of the total estimated cost, and top notch credit history including experience with other long term debts. The OP does not seem likely to qualify for such a loan.

I might suggest exploring options with firms that sell manufactured housing -- a single or multi-story unit could easily give them 1200 sq ft or more. Often firms that sell manufactured housing have more lenient credit policies than even traditional FHA type lenders.

Current manufactured housing is very high quality and efficient. Such housing ought to last at least as long as traditional site-built housing with similar amounts of maintenance. What is a modular home - How are modular homes built | Factory Direct Homes
FYI: the industry generally does not use the terms "modular" and "manufactured" interchangeably.
The modular house industry is very intent on maintaining the difference to avoid the unfair stigma attached to manufactured homes AKA trailers.

A "modular home" is a wood framed house built in sections in a factory and assembled on site. They come in tons of different sizes and configurations, and can be built several stories tall and/or over a basement. They've even built modular highrise hotels in China.

A "manufactured home" is metal framed, built on a chassis and towed to the site. Residential models generally come in "single-wide", "double-wide" and less commonly "triple-wide". As you said, there are many mortgage options for these with reasonable terms, and they can be placed on an inexpensive slab foundation. These can sometimes be purchased used for bargain-basement prices if you can afford to have it towed to your site.
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