Dona wrote me the following letter regarding her difficulty in getting a loan for their earth sheltered construction. October 2009

Hi Joel,
  I believe I contacted you a little over a year ago about the troubles we were having financing our earth home. We were able to finance it and we moved in 8 months ago. For people wondering about financing, it's tough. What I found out during our "build" was that anyone will give you a construction loan. The problem with earth sheltered homes (Here in the United States) is that the entire banking industry follows the guidelines of Fannie Mae and Freddie Mac. Yeah,...those two. Anyway their guidlines say they will not lend money on strange or unusual homes.

  When you first go to a bank, they tell you, NO PROBLEM. They have a construction to permanent mortgage, that way you avoid having to go through the loan process all over again. BUT...and it's a big BUT...when the time comes to roll it over they put on the brakes.

   We kept looking for a lender for a 30 yr fixed, but none would have us. Our credit was excellent, our paychecks good, but all the lenders would use the same excuses - even though you ask them up front and they say no problem. The loan officers will tell you "no problem, let's start the paper work, we've lent money on those before" and usually after 3-4 weeks of needing this paper work or needing that paperwork, then finding the right appraiser who has done these kinds of homes before AND paying all the fees - the end result is usually the same - MARKETABILITY - To them there is no market for this type of home. That is their excuse. The fact is banks use Fannie Mae and Freddie Mac guidelines and have no intention of loaning you the money for a strange or unusual home. I even had one loan officer after going through all of the above say how sorry she was. She would have loved to have our loan in her PORTFOLIO. She wasn't trying to get US the loan, she was trying to make HER portfolio look better!


  We finally found a small local bank that served only a three county area. Their problem was that most of their in house loans (loans the bank keeps and doesn't sell on the secondary market) were about $100,000. They are small and only have so much money. We were offered a 5/1 adjustable rate mortgage (ARM). It's a loan that is a set rate for 5 years, on the 6th year is adjusts.

  We took it. To us, building and having the home was more important than the type of loan. We will survive.

Maybe you can post this for anyone looking for financing info and let them know that doing the homework on financing first is THE MOST IMPORTANT part of building an earth sheltered home. I started about a year before the building was to commence and finally got all the financing in place two weeks before the crews arrived.

Dona
Fieldon, Illinois