Construction Loan Nightmare Help
I am doing a major remodel which is basically building a new house. The banks I have talked to Chase, Hancock (local), and Wells Fargo all want to do a LTC (Loan to Cost) type construction loan instead of the traditional LTV (Loan to Future Value) loan. What this means to me is that they wil require a huge down payment for a Construction loan. They all want 20% of the total project costs up front to do the loan at all. I am in Louisiana, have good credit, high income but, do not have 20% to put down on the construction loan up front. My land/existing house/1st mortgage is $380k, the estimated remodel/construction costs are $400k. If we were doing a LTV loan, I wouldn't have to put any down payment or very little. LTC would mean I would have to put up $140k or so including the $15k I put down to acquire the property. That also means that i would be financing up front $140k of the $400k construction costs which is over 35% of the cost. The bank is really only loaning me $250k. I have to put up $145k and the project won't be complete for 10-12 months. Does anyone have any advice? I have a very reputable architect and contractor so the risk should be low for them. I cannot do a tear down, it would cost me $150k more than the remodel.