I am considering purchasing a home in Bryan with plans to renovate the house and construct an Accessory Dwelling Unit (ADU) in the backyard. This would be my first time constructing an ADU. I have spoken to a lender about financing this type of project and this lender tells me that the simplest way to do this is to take out one loan for the price of the existing home + the cost to renovate the existing home + the cost to construct the ADU. This sounds simple enough, but I am curious if there is a better way to go about this.

Also, I am wanting to renovate the existing house and construct the ADU myself. I have spoken to the City of Bryan and they will allow me to do the work myself, but they will require licensed contractors to do the mechanical, electrical and plumbing work. However, the aforementioned lender tells me they do not finance renovation/construction projects if the cost exceeds $5,000. I am curious if there are any lenders out there with loan products that will allow me to purchase the home and do the renovation and construction myself.

I will gladly take any and all recommendations for a lender/loan product and/or advice for a project like this.

Ok now I'll try a serious reply.

Are you a general contractor by profession? Or at least have documented experience in the field?

If the answer is no then you building, and renovating the first home I assume, is not financeable. With very few exceptions. And having significant equity in the deal makes it slightly more likely. Say 30% plus in cash. But just getting a loan to rehab the house is a task, with you not the GC.

Next the addition. This is phase two. Not sure you can blend j to the purchase. But you can try.

My bank does a lot of construction lending but I wouldn't even know where to tell you to look in this situation.

Your best chance would be to use a FHA 203(K) rehab loan but even then to do the work yourself you have to pay for everything out of pocket and then funds are released to you and you are limited in what you can do without GC experience. Depending on the size of the rehab and ADU costs it may be best to just purchase the home conventional (you can do as little as 3% down depending on your situation, 5% is best for MI rates) and do a unsecured loan for those amounts and then do a A6 refi in 6 months. It would be considered a cash out but you could pay off the unsecured loans and roll them into your mortgage. That's the only real path forward I can see.