Do just the house now, and then when you're done take an equity loan out for the pool. Doing a proper pool is as much of nuisance as building a home. So doing both at the same time would be no fun. Plus this gives you better time to plan the pool location. Bonus points for you if you create a nice enough outdoor space on the house with an accessible bathroom somewhat near where the pool will go, then there is no reason to build a costly pool house.

This is not a good way to start. You are fortunate to have found someone that will do 85% (are they including the land value in the total, right?) Usually construction loans only do 70% at a jumbo.

An additional loan will cause you issues with getting this through underwriting - you'll have to make sure that your income is sufficient. You likely won't be able to use the land / new buildings as collateral - so can you get a home equity on our current home?

The appraiser should have shown adjustments for the pool / pool house. They don't need to find "exact" houses - but can make adjustments up / down for differences. The problem is - that usually the adjustments are far less than the actual cost of the changes. For example - a $40K pool will add only $25K in value.

It's time to assess if this is the right time to do this, or, de-scope the project so that it will allow you some wiggle room on finances for the (inevitable) cost overruns.

We have had two pools. They are not assets imo.

Opt for #1. Put the pool in when you can pay cash for it. I don’t mean to sound harsh and maybe I’m just old but I can’t imagine financing a pool.

if money is tight at all, be careful. You can get in over your head very easily and it’s not a fun place to be. Been there once and we never did it again.

ETA...reread your #1 and realized it includes putting in the pool. So...no I would not do this.

Yes it's rare to be able to find a construction loan that doesn't require at least 20% of your cash in the project.

It's entirely possible that the items beyond the construction of the home are not getting appraised values close to what they cost to build.

This is not an appraisal problem ... this is a cash/equity problem.

My advice is to sit down and discuss with your lender what your options are to make this move forward.

Often there are more solutions after the initial mortgage is closed there are smaller seconds and consumer financing that will help with smaller items.

Most pool contractors have financing resources

The only reason to do a pool at the same time as the house construction would be if you lived in an urban area with smaller lots, where access to the back yard would be harder (and more expensive) once the house is built.

The other reason to do a pool during main construction, is that you are so sick and tired of construction, you don't want your yard and driveway torn up and mangled with the pool contractor after you move in and finally feel like you can breathe a sigh of relief.

(or - that's it's an integral part of the overall program)

Outbuildings and pools add very little value in an appraisal. They cost well above what they will appraise for. A 50K shop gets a 2-4K bump. A 150 pool might get a 10K bump. And you just spent 200K to get an extra 15K in value.

Focus on building the right house. With a nice sized garage. The rest of the floof can be built later. But it’s going to cost you well above what it adds to home value, and most of that is going to need to be handled with future equity loans that get paid back in series, with pretty aggressive payments. If you end up doing any of it. You’re already too underfunded to even start this.

A pond is better than a pool on acreage. A barn is better than a shed. Those are things you are going to need, vs things that you just want. Wants are going to get squeezed out pretty fast without enough money. And you are pretty far from having enough money if you can’t even come up with 15% to do this. Because the build will go over. You need 30-40% if this isn’t going to hurt you big time.

Sometimes "dreams" are unrealistic. I think yours appears to be in the category. Build no more than what you can afford and keep a LOT of extra available as well.

Not a bank person here, but I wouldn't lend you the money to build what you want. None of it sounds like it would appraise. I am in the $10k pool; $2-4k shop camp. And on "family land" - ie not great for resale - never (truly big and maybe unfair assumption here). I wouldn't lend you 85%.

Lots of harsh tough love here. And we never agree on anything....

I'd be prepared to go into debt for a house that met my needs. I wouldn't be prepared to add on a bunch of wants. Pools and pool houses are wants, not needs. Buy them when you have your debt levels manageable, and not before.

My husband and I ran into a similar problem when we had our big addition/remodel. What my husband did was contacted both the bank and the appraisal company and showed them our building plans and asked that they base the appraisal on the prospective build out. The bank worked with us. The residential lending officers actually visited our home on three separate occasions to ensure that we were in fact upgrading the home to the level we proposed we would, understandably they needed to ensure their money was going where it should be. So about midway through the project they increased our construction loan by 25,000, and 3/4 into the project they gave us the final 40,000 they agreed to lend us. This was still about 25,000 shy of our desired amount. In addition to our discussion with the bank, we sat with the contractor and asked where we could cut some corners. He offered us the opportunity to do some “homework” throughout the project which included cleaning up the work site at the end of the day ourselves and preparing the area for the following day, drilling holes in the framing to save a ton of time that we would normally pay the electricians 125 per hour to do, and the biggest savings was painting the house ourselves. You may not have the time or desire to do this much hands on but I gotta day not only did we save enough to complete the project, but we came in under budget enough to furnish a few of the rooms. Best of Luck!

I've told my husband many times that the most important item through the entire build plan process is what the as-built appraisal comes in it since that determines the amount of construction loan we can get. This is especially critical in rural areas where comps (and appreciation) are limited.

Remember that the penalty for poor financial planning here is that your husband’s family land is repossessed. He loses it. With an economic downturn right around the corner, that’s has a large potential of happening if you don’t cut your dream to reality.

This whole idea is very poor financial planning. You’re focused on luxuries that have no place in a build as strapped for cash as yours is.

Plan to live well below your actual means. Build basic and expandable. Live in the house on the property if that’s possible. Or a trailer on the property if not. Focus on cutting expenses until you have a LOT more money saved. You aren’t in any financial condition to even start a more modest build just yet.

I am reading this different than other posters, as it seems unlikely that you were expecting a 100% of appraisal loan. Can you give numbers or percentages for construction, land, and loan?

I suspect you are either talking about an appraisal limit or contribution limit for land rather than loan to value, but I could be wrong. These have different responses than loan to value.

We just closed July 1st on our jumbo construction loan and the bank is covering 95%, all other banks I contacted were 80% including our own bank. The only thing I didn’t like is that it is a two time closing loan so no new loans or credit inquiries for the next 8 months and we are paying about an extra $5k in closing costs but well worth a 95% LTV.

We aren’t putting our current house on the market until we move into new home. We had to qualify carrying both home loans at 5.5%, standard for construction loan but for permanent loan they have to qualify you in case interest rates increase during construction. We all agreed they would probably be less than 4% when we close which hopefully is next March.

So call around, the local smaller banks seem to do more and they are going to package and sell the loan anyway when it’s all said and done.

"Randy Alvarez" will probably return and add to that post.