And? Have you visited your local bank?

Yes, most local banks require us to be residents and working in the area or remotely. We won't be moving until the house is completed.

Also, they want a General Contractor. So disappointing since Tennessee allows owner builds, but no bank, so far, will loan. How is that rational?

And we only need 1/3 the value of the completed home.

We will have invested 2/3 of our own finances into the completed project. An idiot would not finish this project. There is very low risk.

How can you be the owner/builder if you're not there daily to supervise?

Construction loans can happen as long as your credit rating is top notch. You will have to present all sorts of documents and scheduling; you don't get a lump sum, you get the money for each stage of the build; the interest rate is high; and it is good for one year and then you can convert it to a regular mortgage loan or choose another lender for the mortgage.

It's not easy, but better than going to the Mob.

https://www.bankrate.com/mortgages/construction-loans-explained/

There are also private lenders, (often a real estate attorney) who use their own money, higher interest rate, naturally, but your collateral has to be in their best interest, in case you default.

This is a high risk of default project. What type of collateral can you put up to balance that risk?

forgot to mention: open the bankrate lending information. There is a list of lenders you can contact.

Try your existing bank. You have a relationship going back in time. You can use the portions completed as examples of your GC skills to date. Have documentation of your successful procedures estimating, buying materials, permitting, securing bids from subs and how you inspect the work for quality. How you get releases of liens and make payments. All remotely. Include the work done preparing for the remaining segments. You have to be ready to complete with all the prep work done at this point. The picture you show isn't 2/3rds done. Exterior dried in shell with windows and roof is more like that.

@bry911 Thanks! I will try them.

We turned down a construction loan because of the borrower's past bankruptcy and meh credit.

On Friday, the empty home was mysteriously engulfed in flames, sending one firefighter to the hospital with serious injuries. Hmmm...

@Louis, thank you for your unhelpful answer. I respect that you are entitled to your opinion, however rude and immature it is.

By the way, the new loan sharks are on wall street and their interest rates are not that bad. If you can't get a traditional loan, you can certainly get a hard money property loan. The penalty for a hard money loan right now is only going to be between 2% and 4%.

So for every $100,000 you need to borrow you will pay a premium between $2,000 and $4,000 per year during construction. Which is fairly small premium given the scope of the overall work that goes into building a house.

hard money

Never heard the term here (Ontario). We politely call it "alternative" or "distressed" lending.

OTOH, a trade acquaintance I hadn't spoken to in 14 years called the other day seeking financing and simply asked if I'm still "loan sharking"!

Another 2%-4% would only be the beginning premium if the OP were seeking financing here!

There are hard money lenders in Ontario, the current rate for hard money loans up to 75% LTV in Ontario is 7.5% - 10.5%. I don't know what mortgage rates in Ontario are right now, but that would be competitive here.

A hard money loan isn't really distressed or alternative financing. They are just short term private mortgages and are quite common in property development, one common hard money product is the fix and flip loan. These lenders have been around the US and Canada for a long time now, I don't think the average person is aware of them, but most property developers will use them at some point, some will do it often.

I have gotten hard money loans several times because they fund really fast, sometimes in 48 hours. I can get a deal done and then refinance.

the current rate for hard money loans up to 75% LTV in Ontario is 7.5% - 10.5%

That's on the low side. And what that omits is the lender's fee--1.5%-4%, the mortgage broker's fee of 2%-6%++ and often outrageous legally unenforceable penalties that these borrowers don't have the wherewithal to challenge in Court, eg., $1,695 for an NSF cheque, $1,000 for a mortgage statement, automatic renewals at a rate to be determined by the mortgagee etc., etc.

Perhaps privates in Tennessee are more generous, kind and understanding.

I have no idea about hard money loans in Ontario. Here the fees for hard money loans are competitive. Typically the origination fees are about 1.5% for a 12 month loan. The loans will typically go up to 24 months, longer loans can have a slightly higher origination fee (2.25%), but may not.

These are a little bit more than a regular construction loan which range from .75% to 2%, but not crazy bad.

If you don't pay the loan off in the time your loan is for, you have to get a new loan. There is no mortgage broker's fee here for hard money loans as there is no marketable mortgage to broker... there isn't even a mortgage, just a note and a lien. I don't see how you would have a marketable hard money loan, but I guess there might be. There is no mortgage statement fee as there, as again... mortgage literally means a loan that is paid down in installments and hard money loans are interest only balloon loans. Not sure about NSF stuff.

Hard money loans are not always a great idea. The interest rate on hard money loans aren't based on mortgage rates, but on certain other investment returns. So right now hard money loans are running 8% to 10% here, but they were also running 8% to 10% when the 30 year fixed rate was 3.0%

From the borrower's point of view, it seems the lien would effectively be the same as a mortgage: don't pay and we seize the asset.

Where would the OP seek such financing?

It is a collateralized debt, whatever you use for collateral guarantees the debt, the same as any other collateralized debt. So, yes the loan is guaranteed by the property.

There are a variety of hard money options and lenders and Nashville has several. I am sure the OP can find one in Tennessee or connect with a national lender if they need to.

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This is not a recommendation that the OP uses a hard money loan. My comment was that the new loan sharks are on Wall Street and their practices are not shady and there interest rates are not unconscionable (yes I know usury would be a better word). Which doesn't mean that hard money loans are a good thing... they are certainly not. They are high interest lenders offering collateralized short term loans. However, in certain circumstances, such as when the borrowing is relatively small and used to bridge a gap in funding, they can be a useful tool.

I still recommend trying a traditional bank first as I did above.

@User It is obvious you are unfamiliar with construction loans and how they work.

@bry911 Thank you for all of your very helpful posts. I finally did find a lender who will work with me and we should be rocking and rolling in about 30 days. I wish it was shorter, but I will take what I can get. Thanks to everyone else who made really great suggestions. For those of you who apparently love to criticize and post negative, unhelpful comments, you may find more joy in life trying to be helpful and kind.

I’ve seen a few East TN owner‑builders get partial funding by checking with small local banks or credit unions that know the area. Some will work with you if you already have solid progress photos, receipts, and a clear budget to finish. Has anyone here tried a draw‑only loan or brought in a third‑party inspector to satisfy a lender?

You’ll likely need a local bank or credit union that offers owner-builder construction loans — many national lenders won’t touch those. Be prepared with plans, budget, timeline, and proof of experience, since owner-builder loans are harder to qualify for.

You realize this dilemma was posted over 3 years ago, right?

Don't worry about it, they're just waiting to edit the posts to add links.