That's going to be near impossible. You will either need to borrow from your 401k (which you can borrow up to $50K for a home purchase / build), or do this as a personal type loan. No one will want a financial interest in a partially completed property, unless you have a really strong relationship with a local bank (and if your relationship was that strong - it would likely be because of large deposits, thus making the loan request obsolete!)

It CAN be done - but likely not with the property as security.

Does that include the finished roof, doors and windows?

Does it include finished electrical and plumbing and electrical or just the rough in?

What about the HVAC?

@Cpartist - Yes, a watertight habitable shell, with plumbing and electrical hook ups. I will be installing the fixtures, ie: showers, toilets, tubs, lights, etc. myself. I know how to do a lot of the interior work so I don't want to take out more money than I need and go into debt paying someone to do work I know how to do.

@ B Carey - I think what I am asking for is technically called a "Shell only loan," but I am finding that term is being interpreted differently by different people. So what I am looking for is the funding to complete phases of the project, even if I want to hire subcontractors to help with some of the work. I guess I want to go into as little debt as possible. I'd be willing to do a true "owner builder" loan that is financed by the bank by taking out a larger loan and just using the contractors for the really serious portions (Foundation, electric, framing, etc), and then using the rest of the money to finance the work I want to do on my own. That would probably actually be best. I am in my 20s, I don't have a 401k. I just sold the home I did have for $525k. I have gotten approved for a personal loan already, however, (1) The bank caps their personal loans at $35k, and (2) I would prefer to take out a loan that turns into a 15 year mortgage because the interest rates are a lot lower than they are on unsecured personal loans. I purchased the land for $50k but I do not know how the bank would value the land. Can you explain the thought process behind taking out a land loan on land I already own? Thanks for the response

@Cpartist - Yes, a watertight habitable shell, with plumbing and electrical hook ups. I will be installing the fixtures, ie: showers, toilets, tubs, lights, etc. myself. I know how to do a lot of the interior work so I don't want to take out more money than I need and go into debt paying someone to do work I know how to do.

Have you priced that all out yet because that part of the build was actually one of the most expensive parts and I can't imagine it only costing $50,000. Windows and roofing alone cost a bundle.

Also what about the exterior cladding? Will you be doing that too because most houses are not considered habitable until the cladding and roofing materials are also on.

@cpartist - yep I priced everything out already. Ive received bids from contractors. It's a small 1,500sq ft home and it's a basic rectangular shape with a flat roof. Just a minimal modern design. The CDs call for some sort of rubberized coating on the roof but I can't recall the name.

The reason cpartist doubted you... because some of us have to spend 1k in engineering and site survey, $2k for gravel, 1k toilet rental, 1k in permits, 3k in the hookups, 1k site prep, 0.6k backfill, 15k foundation, 1k waterproofing, 6k r/o plumbing, 10k framing, 20k rough materials, 1k rough hardware, 3k vinyl siding, 3k roof, 1.5k front door, 5k windows, 0.5k temp electrical and many others.

The bank may give you a owner/builder construction loan. BUT, you have to have the balance of the funds to build the house above what you are borrowing AND the house has to be DONE in 365 days.

If you have all your bids together that the house is going to cost $150,000 and you have $100,000, you can do a construction loan for the $50,000. But if you only have $10, you need to qualify for the full $150,000 construction loan. You can't borrow $50,000 and then take the next few years to finish the house.

As far as trying to get a 15 year mortgage? The principal and interest on a $50,000 loan at 4% is $370 a month. You can always do a home equity loan after you are done to pay off the personal loan.

If you bought the land (versus being given the land), you may be able to do a secured loan against it for about half.

Even with a 790 credit score, you still have to follow lending rules. If you don't like the parameters of a construction loan, make a different plan that works...just don't expect the lower interest rate!

@ Brian - Yes, I know this can get pricey but there are many variables. I already have the architectural and engineering files finished, along with ALTA and topo surveys, drainage study, etc. I got a bid to do my watertight habitable shell for $40K and it costs $10k for me to bring utilities to the plot :)

@ B Carey - Thanks for the info! I was able to find a private lender who does owner-builder loans in arizona (For anyone who finds my thread via google and is also looking, here is their website: http://www.ownerbuilderloans.com ). I do need to take out a loan to cover the entire scheme of construction, though, so as you mention -- yes, I can not just take a portion out and then spend 3 years finishing it on my own dime. Works for me either way! I didn't have a set plan, I just wanted a better way to get a loan than taking out a high interest personal loan. Also I do like your idea of a home equity loan to pay off personal loan. Might go that route :)

you can also opt to just do a new mortgage once the home is finished. Obviously that will depend upon interest rates at the time, but even a home equity line will require the home to appraise out.

Rather than get a construction loan, we used savings to pay for our addition/renovation and then took out a new mortgage (technically it was a cash-out refi, though the bank's collateral went way up as we went from a 75% LTV on a 430k home to a 60% LTV on a home appraised at $850k). We just used that cash-out to replenish our savings.

@Freeoscar - Unfortunately I am quite young and used the savings I had to buy the land. But I did that because I have a small vacation rental business and my savings I spent on the land will be replenished by the rental in 1.5 years, so I was not concerned about that.

The construction loan I finally found via a personal lender is different as it isn't like a 1 close construction loan that locks in interest rates and secures me with a mortgage when construction ends, I have to find lending on my own and do another closing..which sucks, but it is what it is. If I complete the home construction and have it appraised, am I able to take out a mortgage on the finished home in just the amount the construction loan was for? Say it appraises at 400k, but my construction loan is 100k, can I just do a mortgage at 100k? If my home appraises at 400k, does that mean I have 300k of equity in the home?

Who did you find to build just the shell of your home?