Building costs are highly local. Have you looked on realtor or other sites to see what builder grade new construction costs are near where you live? That might be one place to start.

A local architect may be able to help and be a good investment.

It depends where you live. In SW PA it is doable.

I live In kalispell montana. I do have a builder in mind, he's our main contractor that we do cabinets for. At this point i think what I'll do is draw up a couple layouts that I have in mind for the house, bring them to the contractor and see if he thinks the budget can work. The lot that I'm looking at does have a few building restrictions in the covenants. No 2 story houses, and "ground floor" needs to be 900 foot minimum. A walkout basement with floor above still only counts as single story right? And my upper floor above walkout is over 900ft, but which floor is "ground floor"?

One thing I'm curious about is how detailed of a plan I need to submit to architectural review commitee. If I pay an architect to design my house and the commitee rejects it, that's a lot of money wasted.

The ground floor is the main floor. A walk out basment finished or unfinished is still a basment. The house you are describing is a single story.

Great, so it sounds like the lot is ok for the general layout i want. One thing I'm concerned about is all the costs that come before signing off on the construction loan. I'm sure it will take a decent amount of time and money to get the house designed, get the full budget layout from contractor, submit design to ARC, then turn in application to bank. At any point during this process, someone could buy the lot and all the time/money I've put in is wasted. How do I avoid something like this happening? I have enough cash to just buy the lot and use the equity for construction loan down payment, but then the ARC could deny my house design, or bank could deny my loan application. What is the best way to go about this without risk of something like that going wrong?

What do the other house in the neighborhood look like? If what you are planning is very different in size/design and/or of a much lower quality of exterior finishes, then the ARC might be an issue.

There's some pretty simple looking houses in the area. I don't think I'll have too much trouble getting it approved based on looks. One concern I do have is the separate living space for my mom. The house will have an obvious division of 2 separate living spaces with 2 kitchens, 2 laundry rooms, and they specify in covenants only single family residences are allowed. She is part of the family and from the exterior it will appear to be a regular house. Could this be an issue?

Have you checked with your building and zoning department?

In my area there are restrictions against two kitchens in a SFR - but that may not apply to your area. In-law units or ADU's fall in a special category when you are building. Also check to see if the existing septic and drainfield on the lot you are considering is suitable for your number of bedrooms. It would be a shame if you purchased this lot and had to tear out your drainfield and septic because it was sized too small for your use.

In order to prevent someone from buying the lot you prefer, put it under contract subject to it's meeting your needs (for example, that you get approval for the plans and specs you have from the ARC) and any other criteria. Most sellers will want you to specify a time period.

Keep in mind that the lender is going to want an appraisal to determine value before the house is built. The appraiser is unlikely to count below ground level area in your gross living area which will have an impact on your home's value. It's very, very likely the home will cost more to build than it will appraise for initially. This is common. To me your budget sounds very, very tight. What happens if you have cost overruns?

The architect you choose should know local building codes, zoning ordinance, and the architectural review committee's rules. The gamble will be minimal and the chance of benefit will be great.

A quick gut check on affordability is to go look at tract home subdivisions in your area. See what you get for the money there. Now add at least 50% to that for a custom build of that level as a custom one off non tract home. Add another 50% for building 2 homes on one lot, even if they’re under one roof.

You will never get as cheap anything as a volume tract builder who buys and builds in bulk. If your money has to go as far as it can, then you adjust your needs, and that’s what you buy. Mom needs to share your kitchen with the downstairs office or dining room turned into a bedroom for her.

Or have other family members contribute to your family compound and up your budget.

Or change the amount you’re willing to finance, if you’re able. And keep saving. Maybe get a second job.

^Great idea AnnKH or even a two family home if that is an option for you OP.

Thanks for all the input everyone. To answer a few questions, first of all, I've looked around pretty thoroughly for existing houses I could renovate for our needs and there just isn't really anything out there that works out. Having a single kitchen for all of us just isn't an option. My mom needs to have her own separate living space. Her and my wife get along ok, but there's no way I can realistically expect for all of us to basically just live together from now on. I would probably rather just give up on the idea and continue renting if the only other option was living in the same space together. The other issue with anan existing house is planning for maintenance. We would need enough in the budget for buying the house, renovating, plus money leftover for any possible issues with the house. A brand new house isn't gonna have maintenance issues for a decent amount of time.

As for the tight budget, keep in mind I am building my own cabinets at cost of material. Probably 15k value at least for a few thousand in material. Issue with that is convincing bank to allow only a few thousand in budget for cabinets. Another possibility I want to consider is leaving basement unfinished for loan, then finish it out of pocket myself. This would help out with loan amount vs appraisal since the finished basement doesn't add much value. Having my mom live on our main floor for a while is fine while I finish basement, just not gonna do it for 30 years

"A brand new house isn't gonna have maintenance issues for a decent amount of time" LOL--don't bet on it. If you are nickel and dimeing to try to make this work--now may not be the right time.

Issue with that is convincing bank to allow only a few thousand in budget for cabinets.

Why is this an issue? Banks do it all the time and unless your numbers are bad they don't usually have any trouble doing that at all. I have had multiple banks allow it without question.

We often hear about a construction loan's LTV (loan to value) which is most commonly 80%, but they also usually have a cost to build plus land cap. For example, my bank does 80% LTV or 95% cost to build, whichever is lower. They get very flexible as the numbers get better, so they have no trouble letting me price in my cabinets as their LTV is already protected.

For example, suppose I am building a house that appraises from the documents for $250,000 and has a cost to build plus land estimate of $180,000. That means the bank will loan the lesser of $250,000 x 80% or $180,000 x 95%. Since the cost to build is under the LTV floor, they will allow quite a bit of stuff that they will not allow when cost to build plus land approaches or is over LTV.

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This idea is creating a flaw in your math. Your assumption seems to be that a bank will lend 80% of build cost rather than LTV on appraisal. This is a fair assumption as so many people are in that position. However, the reality is that when you actually have the skills to add some sweat equity to the project the loans get a bit easier. So for example, let's assume that all the facts that you gave but that the house that you are supplying cabinets for will appraise at $300,000. The bank will then loan up to $240,000 or 95% of what you actually spend building the house. Since there is $40,000 of cushion in the build numbers they don't care about assuming you are supplying cabinets. Were there no cushion in the appraisal they would start caring.

This is the way construction loans are supposed to work, however, you might have to work a bit to find a lender who understands this as it is a pretty big rarity these days.

Furthermore, just because they will loan more doesn't mean you can make the payments.

Chocolatesnap, i don't think the nickle and dimeing i plan to do is gonna make the house more likely to need maintenance. In fact I would even argue the opposite. First off, not much can go wrong with cadet heaters, plenty can go wrong with hvac systems. As for some of the other budget type things lile vinyl siding, laminate flooring, etc, lasts a very long time with minimal maintenance. Obviously buying a 30 year old house is gonna be much more likely to need maintenance.

Bry911, I'll have to look through my emails again to confirm, but I'm pretty sure the bank told me it's 80% for either LTV or build cost plus land equity, whichever is lower. Not the

95 percent of build cost you mentioned.

As for bank not allowing low budget for cabinets, it's because I'm not a licensed contractor with insurance. If something happens to me during the build, the bank is unable to complete the house with only 3k budgeted for cabinets. Same goes for any sweat equity I pit into it. I can install all my flooring and trim for zero labor cost, but the bank isn't gonna approve a budget based on that because they have no recourse if I get sick or die or just don't finish the work I said I would. They want licensed and insured contractors with realistic budget amounts. I can use my free labor to come in under budget at the end, but the bank won't count on it when approving the loan.

As for getting a larger budget, my down payment is the only issue. Right now my family and my mother pay a combined rent of 1625, soon to be 1800, so figuring a mortgage at that amount gives a pretty large budget, but like I mentioned, we only have about 60k to work with. If we wait and try to save money for longer, it's gonna be difficult once our rent goes up. I feel like we need to make this work now before we throw any more money away on rent. Once we get into a house, things will get so much easier. At 250k mortgage, we are looking at about 600 a month less in monthly expenses vs now. Not just the mortgage being lower than rent, but also sharing internet, tv. Also new location saves me about 100 per month in gas. This is one reason I considered leaving basement unfinished to do out of pocket later. Once we go from existing rent to mortgage, I will have MUCH more disposable income. Probably 1500 per month that I could put into house. Not to mention, any work kept out of the mortgage costs about half as much with no interest.

It sounds like you've done a good job looking at the numbers, but just to double check: have you taken into account the following expenses of owning your own home vs. renting?

- property taxes

- special assessments

- homeowners insurance

- utilities (heat, electricity, water/sewer, trash)

- mortgage insurance (until you have 20% equity)

Additional upfront costs:

- landscaping

- lawn mower

- snow blower

- patio furniture

Yes, the figures I have are including taxes, home insurance and utilities as well. Not so much the lawn mower and patio furniture, but not too worried about that. this particular lot im looking at is actually a pretty sweet setup. It's community water which in my opinion is best case scenario. They have a 13 dollar per month hoa fee to cover that. So no city water bill, no well to drill or maintain. Septic is installed but possibly needs work. It's a 1000 gallon tank but listed as 2 bedroom setup. Hopefully drain feild can just be extended a bit to support our 3 bedroom. As for mortgage insurance, doesn't apply here since they require minimum 20 percent down for construction loan

Bry911, I'll have to look through my emails again to confirm, but I'm pretty sure the bank told me it's 80% for either LTV or build cost plus land equity, whichever is lower. Not the

95 percent of build cost you mentioned.

Then either get a new person at your bank or get a new bank because that is not how construction loans should work. I have seen banks do 90%, and it is possible that your bank will only do 80% and 80% but both of those caps should be in the loan paperwork somewhere. There are several reasons that both of those caps must be present and if your bank uses the same number for both caps, just find a different bank. There are mortgage brokers for construction loans that can get you a proper construction loan.

As for bank not allowing low budget for cabinets, it's because I'm not a licensed contractor with insurance. If something happens to me during the build, the bank is unable to complete the house with only 3k budgeted for cabinets.

This should not be the case, if your bank is telling you that, then you have located the problem. The bank should only be worried about protecting the loan to value and your debt to income. So the key to converting sweat equity is how it translates to the appraisal.

While I understand your confusion, it doesn't really make sense. The bank's exposure is based on their ability to recover in default. Why would they prefer an 80% LTV with manufacturer's cabinets over a 60% LTV with your own custom cabinets? There is no reasonable situation where the house would not be finished with that 20% LTV, with room to spare for their recovery. I have done this several times, the bank will even give me draws for my hourly labor so long as my LTV stays low enough.

Furthermore, if you are not going to have a payment problem then you can piggyback a loan to give you the down payment. The bank can't stop you from taking an 80/10/10 on the property.

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There are two keys to getting this done. (1) The sweat equity you want to put in has to be reflected in the appraisal. All of the above is predicated on the idea that your work on the house will result in an appraisal greater than the cost. If you can't turn your labor and materials into equity then nothing above matters as your LTV will be higher than your cost to build plus land. (2) Your debt to income on the loan must be sufficient to make the payment(s). If you are being held back by your income, then no amount of equity will fix your cash flow problem. If those two things are fine, the financing is not hard to get done.

I apologize OP, I should have been more clear in the intent of my comments--just was meaning to say, "Life happens." Make sure you have enough $$ cushion during and after this process just in case something does not go as planned--there are plenty of stories of new builds on Houzz, that were quickly followed by significant expense and redo. Not "maintenance" per se, but Material failure, contractor failure, previously unforeseen site problems, design problems, water issues, etc. etc. etc.

I can see you have been thinking through much of this already--I was just worried because it sounded like you were building right up to your limit--and didn't have room for error or the unexpected. Many here will tell you to have 20% or more of the estimated build cost, readily on hand for those unforeseen variables. As you are available for much DIY that percent may differ--but should still be considered.

Ok, thanks guys. One issue I'm having is getting prompt responses from the bank. I have a lot of specific questions for them, but sometimes it takes up to a week to get an email response. My work schedule makes it hard to talk with them over the phone. Not sure if it's normal for it to take that long to get responses to questions. At this point I'm still not sure how much I can get approved for. I have a 710 credit score but only make 44k salary. My mother receives about 18k per year in disability but her credit isn't so good. I just finished paying off my car so I have zero debt currently. We really don't want to spend more than 60k, but there is a bit more if needed. As far as we are concerned, this has to happen. We can't keep throwing money away on rent. Not only could I have a house paid for in 30 years, but at significantly lower monthly expense than both of us renting separately. I'm 32 and my mom is 67. Currently I have to give my mom 500 a month to help her with bills. If we don't do this, I'll have absolutely nothing to help me with retirement.

Not sure if it's normal for it to take that long to get responses to questions.

Every bank is different but often the mortgage originator at a bank is not very well trained. Your best bet is to probably talk to the contractor that you have a relationship with and get his recommendation on a bank. Once you get off the beaten path, they simply may not know the answer, so it is entirely possible that the time lag is happening because the person originating the loan has to forward your question to others and wait for a response.

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I would urge you to consider the implications of shared ownership carefully. Once you get closer to saying yes, you might consider getting an attorney involved to structure the final deal as each of you want to protect your share from the other's liabilities.

Looking at the $44K alone, your maximum payment using the 36% DTI is $1,320 per month. That will include any installment loans you have such as credit cards, car payments as well as taxes and insurance on the new house. If my tax rate for Kalispell Montana, that means you should be able to qualify for $230,000 in mortgage if you ignore any PMI requirement (which you can avoid). Really, given your income you might get a loan up to $280,000 using the 43% DTI, but I would strongly advise against that. In fact, some will argue that you should be closer $175,000 financed but honestly I find the 28% guideline to be highly subjective.

As a safety measure I would also advise being OK making the payment alone, any help with payments is great but having help and needing help are two different things.

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I would also urge you to pay attention to the energy performance of your house, just a little more on the mortgage each month might alleviate some big spikes in energy usage.

Good luck

Sounds like you need a better lender to me. There is no reason for the loan officer to take a week to respond to your loan questions.

Please blend styles you like but know further landscape and decor will not be easy. And Porte cochere is a covered drive thru, whereas a car port doesn’t assume a drive thru option. It’s there online and can be referenced. Both serve a great purpose, one just had a less high faluten name and there’s no drive thru option but port cochere is in the dictionary

Start with the locality rules about two dwellings on the property. Those are two major obadtacked that must be overcome be for anything else moves forward. You may find that the property will not allow it, or that the allowed septic prohibits as much occupancy as desired. Good luck!

Yeah, I will definitely be making sure everything is approved before committing. I'm curious, when does one dwelling technically become 2? Is it the second kitchen? What if it's called a "kitchenette"? If it makes any difference, the lot has no zoning, it's the covenants that state "only one family residence", since it's my mom, it is one family, but there will be the other kitchen.

If the septic is no good, is that even worse than starting with no septic? The tank should be fine, 1000 gal is good for 3 bedroom. I'm thinking it would be the drain feild needing a change if anything. In the documents for the lot, there's a sketch of the septic system and it has an area layed out for replacement site if I need to start fresh on drain feild.

Would you consider doing the second kitchen at a later time if it eases your way into getting a loan or meeting the covenants? People add basement kitchens/kitchenettes all the time, sometimes referred to as summer kitchens (an effort to keep the heat out of the main living areas during the hottest parts of the year) so if your mother and wife can commit to peaceful living short term it might be an option for you. If everything else is in place for your mother's private space, it also buys you some time to replenish $$ and get the 2nd kitchen done.

A second kitchen is what turns a shared multi generational single family home into basically a duplex. If you have covenants that prohibit this, this is going to be a war to get them to allow it. Be prepared to be taken to court.

I am far from a pro, but I suspect the second kitchen may become a problem if the second unit can eventually later be rented as an independent unit. You may want to find somebody where you are who will be able to answer this question and to tell you what will be considered a single family housing and what will not. But while people here will be able to suggest ideas, they will not be able to answer definitively to this question.

Ok, I'll try to get an answer on second kitchen before moving forward on this lot. If I can't get a definitive answer from a neighbor, who do I contact? Like I mentioned, it's not a zoning issue, it's just stated in covenants. What I don't want to do is spend money having an architect do plans, then just have it turned down. Is there someone i can contact to get some general answers about covenants?

To put it in exact words "No structure may be erected, placed or allowed to remain upon any individual lot except one single family dwelling house of no less than 900 sq ft finished ground floor living area"

Will this most likely be a no go? How can I find out for sure without submitting full detailed plans?

To me that would mean no ADU or multi-houses. I would definitely not rely on a neighbor for a definitive answer. I would want it from the people who hold and enforce the covenants and restrictions.

Who is responsible for enforcement ? Who approves plans for this particular HOA ? They should be able to answer.

A second kitchen is what turns a shared multi generational single family home into basically a duplex. If you have covenants that prohibit this, this is going to be a war to get them to allow it.

This is not true.

I know this is going to be hard for some people to accept, but sometimes there just isn't a bright line test for things. What turns a multi-generational house into a duplex is its use and not its design. There are some designs so independent of each other such a true duplex with separate systems for HVAC, water, electricity, etc. that is hard to argue that they are in fact multi-generational rather than duplex homes. I would tell you a general guideline is that you need to keep all the utilities in common and design the house so that there is a dominant portion and other portion rather than a mirrored system. Another hint might be to design it so that it is easier to convert back to a single home than it is to convert to a true duplex.

We should also note that several states have recently enacted legislation that lifts all deed restrictions to multi-generational living. I would consider calling the Montana division of AARP and asking for information. They will have some tools available to help answer these questions.

Who approves plans for this particular HOA? They should be able to answer.

They may not be able to answer, in fact, unless they have specifically taken this into consideration or action then it is doubtful that they are aware of conditions that would convert a single family home to a multi-family home.

Thanks bry911, sounds like it's still up in the air as to whether or not it's allowed.

So here's another question. Some have suggested that I just build the house without second kitchen, but just have plumbing and electrical done so i can add it later out of pocket after house is done and apprasied. My agent actually suggested the same and said the only downside would be if i tried to sell tthe house later on. Most likely i would have to remove the kitchen. So if I design the house with let's say a "wet bar" down in the basement so plumbing and a couple cabinets are in place, finish the house, everything is legal, then later on add a full blown kitchen out of pocket, what type of consequences could I be looking at? If there's a possibility of being forced to rip out my kitchen while we live there, it will no longer work for us. Is this a bad idea?

OP - why try to circumvent restrictions that may not exist? Talk to whoever is responsible for permits, and find out what you can and cannot do.

We can do a semi full kitchen , cabinets, fridge, microwave, etc. Just not a stove in our township. Later you can add a stove then if you go to sell just remove it and maybe stick a wine cooler in its place.

Jmm1837 , I would definitely prefer to not have to hide anything, im just trying to cover all scenarios. Mostly what I want to avoid is spending time and money having an architect design my house just to have it denied when submitting the plans. How can I avoid a situation like this? It sounds like no one really knows for sure who can answer these questions definitively and reliably other than the commitee that I will submit plans to, but I'm sure they require fully detailed plans done by a licensed architect.

How do I avoid the possibility of needing to start over with a new lot after spending money on plans and getting denied?

On a side note, I talked with my mom and after she thought about how often she actually uses her oven, she's open to the idea of a more simple wet bar. Small fridge, couple hot plates and air fryer, microwave. She really doesn't need more than that and it would also save huge on the budget if we don't need 2 full kitchens worth of appliances. We are still gonna need a separate washer dryer though.

Maybe its different where you live, but where I live, the local council has all the zoning rules on line, and their office will advise on issues like this. Plus, a local architect should know the rules.

Jmm, would that still be the case if the lot was specified as no zoning, and these restrictions are just based on covenants? I found a website for the hoa and sent them an email with a few general questions. We'll see if they come back with anything other than "submit your plan and we will review it"

Shelter-kit.com or some other company could be a solution. You and a couple of friends can build the shell, if you have the time. Everything is precut and numbered. I'm thinking of using them for an addition.

Sounds to me like you are in excellent position to buy an existing bi-level & renovate lower level to your households needs. I have friend who has stayed in the basic bi-level they purchased 45 years ago, but it is no longer basic! They added a generous wet bar in the lower level for entertaining, a 2nd master suite on that level w/ a stack washer/dryer, a greenhouse, etc. All, along with a nationally recognized two acre garden. Way over the standard of their perfectly nice neighborhood, so who knows how it will eventually appraise, but they don't care as that's "their kids inheritance" and they long since paid off the mortgage and various little HELOC's for

various upgrades.

I would start by talking to the HOA. They may not have considered this yet but they may discuss it and make a decision but it won’t be quick. As for the bank it may be hard for them to answer hypothetical questions without knowing all the other factors that goes into the decision.

Samarnn, that would definitely be a good option and I've looked around for houses that could work on my area, but I'm just not finding much that lays out the way we need it within the budget. I need about 1000ft on main floor and another 600 or so below for mom. Usually a bi level with 1000ft main floor means 1000ft second floor or basement. Getting up into 2000 to 2500 sq ft houses are mostly out if our price range when figuring in the work I would need to do to add an extra kitchen. The perfect layout for us that efficiently gives us the space we need is garage plus 600 ft of basement, then 1000ft above. I'm still looking out for something that could work, but so far no luck. Also keep in mind that one way I'm affording this house is by putting sweat equity in. I don't have as much opportunity for that on an existing house, so the cost doesn't really end up much lower than building brand new.

Even rural areas have zoning and are covered by state adopted building and health codes. The zoning may allow for agricultural, and residential mixed. Or industrial. Or mixed use. It may be very lenient, as opposed to very restrictive. You could wind up with a sewage treatment plant, or 700’ long chicken house, or 10,000 member church, right next door to your cottage, with lenient zoning. It doesn’t mean that there is no zoning. It means that the zoning is non restrictive.

Your bank’s financing is contingent upon you producing something that meets nationally adopted building codes, even if there is a lack of local oversight and inspection. If you want a wood stove without the proper clearances and fireproofing, or a hillbilly solar setup with a dangerous battery bank setup, they can decline to provide the funds. Insurance companies can decline to cover you, which also eliminates any bank financing.

The freedom to build a non code compliant personal dwelling in this country depends on 100% self financing, and a location prohibitively far from interactions with an urban area.