Financing for "non-conventional" home construction (loan, fixed rate, interest)

[frisky]

Just discovered this forum and after reading through it, perhaps someone can explain where I'm going wrong.

Under normal circumstances, I would think I'm exactly the type of borrower that lenders would most want to see: FICO score over 800, 29 years on the job, no outstanding debts and almost 3 acres of land, owned free and clear.

If I wished to build a "conventional" home, I have an offer already of 250K at 4.25% (4.379 APR), but that becomes "NO WAY" when I say that I want to build a "non-conventional" home.

Living in Florida, I decided I wanted a home that could stand up to the worst that Mother Nature could throw at it. Something energy efficient. The home I intend to leave horizontally. A round home.

My choices were either a Deltec panelized home, or a home that was drawn up by an architect and site built with I.C.F. construction. I have quotes for both, but have been unable to find financing for either. Strictly because of the buildings shape. In fact, the lender I mentioned above told me specifically "We want to ensure marketability, if we should have to foreclose." I would think they should be more interested in my ability to repay. After all, with well over 100K already in the lot, I'm not exactly in a position to just walk away.

So, I guess my question really boils down to, when did it become more important to lenders that the homes they finance construction for be "marketable in the event of foreclosure", instead of "Can we realistically expect this loan will be repaid?" Are there any options I have for finding a lender who operates on this sort of basis?

Sorry for the length. Thought it best to get as much info out right away, rather than multiple posts in response to questions.

Frisky

[chet everett]

I know that lenders are very skittish and when they see something that is not easily classifiable they generally are not going to stick their necks out. In my experience the LARGER the lender the LESS LIKELY they are to make exceptions, but the really SMALL LENDERS also do not want to get stuck with anything too far away from 'mainstream'.

Your best bet is to talk to mid-sized banks as well as try to get enough of your assets together so that you can get in the "private banker" department of larger bank.

You might also try to make some connection through CUSTOM BUILDERS that still have enough business / assets to have one-on-one relationships with either traditional banks OR sources of private financing.

Expect to pay a little higher interest rate and/or have smaller total borrowed amount with more of your own cash at stake in the from of a CASH (not land) downpayment that exceeds 20% as well. Banks comfort level is still not back where is once was especially in place like Florida...

Good Luck!

Originally Posted by frisky

Just discovered this forum and after reading through it, perhaps someone can explain where I'm going wrong.

Under normal circumstances, I would think I'm exactly the type of borrower that lenders would most want to see: FICO score over 800, 29 years on the job, no outstanding debts and almost 3 acres of land, owned free and clear.

If I wished to build a "conventional" home, I have an offer already of 250K at 4.25% (4.379 APR), but that becomes "NO WAY" when I say that I want to build a "non-conventional" home.

Living in Florida, I decided I wanted a home that could stand up to the worst that Mother Nature could throw at it. Something energy efficient. The home I intend to leave horizontally. A round home.

My choices were either a Deltec panelized home, or a home that was drawn up by an architect and site built with I.C.F. construction. I have quotes for both, but have been unable to find financing for either. Strictly because of the buildings shape. In fact, the lender I mentioned above told me specifically "We want to ensure marketability, if we should have to foreclose." I would think they should be more interested in my ability to repay. After all, with well over 100K already in the lot, I'm not exactly in a position to just walk away.

So, I guess my question really boils down to, when did it become more important to lenders that the homes they finance construction for be "marketable in the event of foreclosure", instead of "Can we realistically expect this loan will be repaid?" Are there any options I have for finding a lender who operates on this sort of basis?

Sorry for the length. Thought it best to get as much info out right away, rather than multiple posts in response to questions.

Frisky

[TimtheGuy]

Originally Posted by frisky

Just discovered this forum and after reading through it, perhaps someone can explain where I'm going wrong.

Under normal circumstances, I would think I'm exactly the type of borrower that lenders would most want to see: FICO score over 800, 29 years on the job, no outstanding debts and almost 3 acres of land, owned free and clear.

If I wished to build a "conventional" home, I have an offer already of 250K at 4.25% (4.379 APR), but that becomes "NO WAY" when I say that I want to build a "non-conventional" home.

Living in Florida, I decided I wanted a home that could stand up to the worst that Mother Nature could throw at it. Something energy efficient. The home I intend to leave horizontally. A round home.

My choices were either a Deltec panelized home, or a home that was drawn up by an architect and site built with I.C.F. construction. I have quotes for both, but have been unable to find financing for either. Strictly because of the buildings shape. In fact, the lender I mentioned above told me specifically "We want to ensure marketability, if we should have to foreclose." I would think they should be more interested in my ability to repay. After all, with well over 100K already in the lot, I'm not exactly in a position to just walk away.

So, I guess my question really boils down to, when did it become more important to lenders that the homes they finance construction for be "marketable in the event of foreclosure", instead of "Can we realistically expect this loan will be repaid?" Are there any options I have for finding a lender who operates on this sort of basis?

Sorry for the length. Thought it best to get as much info out right away, rather than multiple posts in response to questions.

Frisky

A lender has to be very concerned with both. The have to consider the primary source of repayment (you with your earnings) and the secondary source of repayment (the sale of the collateral). All lenders are going to be concerned with a truly unique home.

Another consideration is that many/most lenders will want verfiy that permanent financing will be available to take out the construction loan. Fannie, Freddie and FHA will have the same hang ups with such a property and will not finance it. I.E. you will not be able to secure 30 year fixed rate financing on such a property.

[marmac]

Originally Posted by TimtheGuy

A lender has to be very concerned with both. The have to consider the primary source of repayment (you with your earnings) and the secondary source of repayment (the sale of the collateral). All lenders are going to be concerned with a truly unique home.

Another consideration is that many/most lenders will want verfiy that permanent financing will be available to take out the construction loan. Fannie, Freddie and FHA will have the same hang ups with such a property and will not finance it. I.E. you will not be able to secure 30 year fixed rate financing on such a property.

---A lender has to be very concerned with both---

Good point (both )

[frisky]

Thanks for the input. Since I intend this to be my "final" residence, I guess I'll just have to keep saving and looking.