100% Construction Financing-what Do You Think Of It?

Badfish740

I am 25 and looking for my first house but not having much luck finding it. My fiancee and I are both civil servants and we love our jobs, but we don't make much. Also, we live in New Jersey, love the state, all of our family and friends are here, etc...but here a "starter home" goes for nearly $300K! At first we thought about a fixer upper and an FHA 203K loan in order to refurbish a house, but we found that the cap for the repair budget was $35K. Most houses we looked at in the $200K range (We decided $230K was our max price) needed more than $35K worth of work. Bad septic systems, major structural issues, etc...

Just recently I stumbled on these companies who will 100% finance your project from the raw land to the numbers on the mailbox. One in particular I found, Buildmax, is willing to allow the homeowner to be the GC, purchase any materials/plans from whomever they'd like, build for 12 months with no payments etc... The idea is that you save enough money by being your own GC (and yes I realize that this is where accurate cost estimation/anticipation of overruns is vital) that you automatically have equity in the house once you're finished, which serves as the downpayment for a regular mortgage.

The reason I mentioned Buildmax is because they give you the most freedom, but there are plenty of other companies out there. One I saw that was affiliated with Home Depot seemed to have a good selection of materials, but you had to choose from one of their home plans. One thing I like about Buildmax is that I could even build a modular with their method. Anyway, has anyone had any experience or dealings with companies such as these? Are there things to watch out for such as outrageous fees and big catches in the fine print? I realize that the risk associated with GC'ing a home yourself is the "catch" in a way, but at this point its a calculated well thought out risk I'm willing to take.

Just a little more info which may help, we are looking to build a small Cape Cod, nothing terribly huge or overly fancy. Just a good solid starter home that would be upgradable/could grow with us. Obviously we'd hope to make money when we sold, but we're in no hurry to start a family, so we'd be looking at a home to stay in for at least 10 years before we'd decide to relocate again. I've looked at plenty of plans online that seem to offer everything we'd want (Cape Cod, 2 bedroom, 1 and 1/2 bathroom, potential for more bedrooms/full bath upstairs, 1300SF, etc...) that are attractive and flexible. We also have help close at hand in the form of friends and family with many years of experience in various trades. My fiancee's father has 25 years experience in the business and is currently a Project Manager for Castle Rock homes. Through my work in government I have developed close relationships with many union electricians/plumbers/etc... At the very least they would prove an invaluable resource when estimating (and over estimating) costs.