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The Requirements for Getting Pennsylvania Construction Loans

There\'s no no question that getting a construction loan these days is much more difficult than it used to be. It\'s very easy to become discouraged considering how stringent lenders are about approving new construction loans Pennsylvania. However, even though you have every right to be leery as to the chances of being approved for a construction loan, before you begin to panic, it\'s good to know the stipulations for Pennsylvania construction loans before you prematurely throw in the towel.

First the bad news, many major banks and other lending institutions simply don\'t offer home construction loans Pennsylvania anymore. Because of many of the major as well as regional banks overexposure to sub-prime lending as well as construction loans, some institutions have simply stopped their construction loan programs altogether.

That is not to say that there aren’t any lending institutions that provide loans for the construction of a home. There are still quite a few banks that do but you\\\'ll need to understand that the requirements for these loans continually change and the banks are more cautious about who they lend to.

First of all, in order to qualify for a construction loan, you will need at least six months of cash reserve or land equity equal to six months worth of income. The second thing you\'ll need is a minimum credit score of 680. You\'ll actually need a credit score of 700 or higher if you are looking to borrow over $417,000.

One area where the laws have changed regarding construction loans is the down payment that is required. In most typical home mortgages you need at least 20% down, however; with construction loans you\'ll need a down payment of at least 30% to even be considered for the loan. Lastly, you\'ll need to have steady income of at least two years, traditional or self-employed and your debt to income ratio cannot exceed 45% of your total monthly income.

With all that being said, you need to fully understand that even if you meet the criteria, you may be turned down for a loan. As banks have become extremely cautious, construction loans are becoming harder to find. That\'s why it\'s important that you meet all the requirements in order to give yourself the best opportunity at getting the money you need to construct the home that you want.