The majority of builders also operate with start to finish only as well. But I think finding a GC that would do the build won't be hard, but the financing could be.

Right. You can do it just pay cash as you go. Few lenders want to secure a loan with an uninhabitable building.

We managed finding the subs to do all those things without a GC or builder. If you do the research it'll save you much. But it takes time and reasonable effort. It sounds like you may be up for it. We found our rough crew working a small sub development and they fit us in. Same with the drywall crew. We did the final fine finish level of drywall finishing(tiny pinholes) ourselves and painting.

Too risky.

You MIGHT can find a builder who is more like a project manager and works on a straight fee / month basis and banks accept that but banks will essentially look at this as a self build and loan you very little because of the risk they see in this method.

Do you own the current property with the home free and clear? What is the value? The only way that’s bank will finance a partial build like that is if they could foreclose and sieze a much greater asset than the loan amount is for. And you’re putting the whole property up as collateral, with additional high amount of cash as well.

The other alternative is a HELOC on your current house. But the fact that you’re building a new house on the property says that the old house is in poor shape and will be torn down when you are done. So, land value is all there is there is really.

That isn’t likely to fly, unless the properties all around are also doing tear downs and new builds. If that’s the case, then the as bullt appraisal would just justify the project. But not a partial construction phase half a project that will get finished at some point. Only a fully completed on some type of deadline build from a pro is gonna get a bank to say yes when a teardown is involved. That way it actually gets done and is an asset, not a liability.

So, it’s all cash. Even that will be a big problem with your current mortgage holder. Or there is no mortgage. And there are expiration dates for permits. So you really need to understand that you can’t go the typical take forever to DIY finish here, even if you can get the shell done.

It sounds like you have already found some GC to get you dried in. What you need now is a bank that does owner-builds. Big banks do not. Also, harder to find in large metropolitan cities. Banks that work with farmers may be more likely to do this. I do agree with others about exploring managing the whole process. As far as lending goes, call every bank you can. Keep in mind that they don't want a construction loan longer than 12 months. My bank will let me owner-build. I also informed the lender that I may pay cash for the foundation, so the cure time didn't count against my 12 months. A typical construction loan would need to be done at the very beginning of the process, but you may be able to gain a few months if the bank will allow you to start their 12 months when you run out of cash. Again, very unusual, but my bank must be use to crazies!!! Our county also doesn't have a time limit, but we must continue working on the house. We should finish ours in under 12 months from start to finish, but having a little extra time will reduce my stress level.

Thank you Jeffrey Grenz, Sophie Wheeler, and B Carey. I'm familiar and gotten very informed over the last few weeks with the challenges of traditional financing which is why I posted here. I have spoken with 3 traditional lenders who have not been interested. I should have been more specific and asked for self build financing options. Your additional comments added a lot of insight.

Jeffery Grenz, I'm hoping to find more companies like Normandy Mortgage, they are the only self build financer that I have found googling. I am waiting one of their lending agents to call me back. I agree I can't let the project drag out. I'm planning on 7-10 months, assuming I can get a shell in 5-6. I've done two major rehabs in under 6 weeks each with my wife just on weekends and after work. I'm saving all the finishing work for us, which is good experience we already have and one of the more expensive mark up places for contractors.

Sophie, we purchased the home last year and have a traditional mortgage with 10-20% equity. Tear downs are happening in our neighborhood at the frequency of one a month. There have been 8 on our street alone. New construction is being relisted with 3000-3500 sqft at $650k-850k, but in most cases has already been under contract before being built. So the big banks are very interested, but only at 10-15% down of appraised value (not construction value) and only working with an established builder. We have looked at HELOC's but the only one I looked at was for $90k. We are tentatively planning 2500 sq ft with construction costs of $200-250k. We are doing a very simple rectangular two story home with no complicated roof line. The current house is very liveable, but there is zero interest in fix up or renovation sales in the neighborhood. Many more buyers that just want to go the big mortgage route with big new house, than buying a 1000 sq ft 1940s square home. Any existing homes that sell now are just torn down

B Carey, I'm glad to hear your experience is going well. I do not have any GC picked out. I have two names local friends gave me to speak with. I have spoken with two builders about the project that will be getting back with me. One already said that they are fine doing just a shell. Do you mind sharing what bank you have used? Maybe they know someone in my area (Charlotte, NC) as well.

I have also looked into 203k loans, but the fact that I have to keep the existing foundation (won't support a two story home) and I've heard most general contractors don't like working with them.

I am trying to go this route because I have the skills to finish the home and don't want to pay extra for it, and then double it over the interest of a 30 mortgage. I also would like to use a basic SIP construction for the exterior walls, which the local builders in the neighborhood are also not interested in. The two builders I have already spoken to that are on board with project, are ok with that element. My biggest challenge I forsee is finding more self build lenders.

I would appreciate anymore suggestions on self build lenders (like Normandy) people might now.

Jesse-I am in the midwest. Only a bank that holds a lot of loans "in-house" is even going to be able to do this. Call every bank in a 60 mile radius and ask about owner-build. However, it sounds like you plan to tear down the existing house that has a mortgage? My understanding is this is illegal. The new bank would need to pay off the first mortgage as part of this. Do you have 20% of the full current mortgage plus construction costs? If not, you are likely not going to be able to get any bank to do this. Understand that what you are trying to do is a very risky proposition for a bank. If you don't have 20% skin in the game, you will be unlikely to get a lender onboard.

Thanks for all the great information. Any other buzzwords we should use beside self build construction loan when I start calling as many banks as possible?

We are on track to have 20% of the original mortgage plus construction loans within the next 6-12 months.

Keep saving. You are way underfunded to do this. The only way that a bank will be on board is if you subdivide the property and build one or more large spec houses on the subdivided pieces, with a GC partner sharing the risk and costs. Then use the profits from that to do the teardown and rebuild on your lot.