Husband and I are looking to buy some land and build a small 2 bedroom house on the land. We do not qualify?

for the Ag loans and was wondering if anyone knows of a bank that will give you a loan if you have "Fair" credit. thanks

Ag loans are not what you need right now. Save that for later, after you have proven the ability to show a profit from the land and want to buy more. Right now, you need a construction loan that will count the land purchase as the "first draw" against the loan. Here is how it works:

You take your house plans and have at least one licensed contractor submit a bid to build based on those plans. A time-line should also be given by the contractors. Find a lender, such as Countrywide Mortgage, (no, I don't work for them), who does construction loans. Make a personal contact with of of the loan officers, letting him/her know you have your plans and bids done. Get qualified with them so you know how much of a loan they will give you. (you probably should do that first), and, based on the cost of construction and land, go find the land that works with the loan amount you are approved for. If the house costs $150,000 to build and you have a loan approved for $400,000, then you can buy $250,000 worth of land.

Every "draw" is counted for in an interest only payment for the next month. You buy the land with this loan and it is counted as your "first draw". You will make interest only payments on the land beginning in about 2 months after the purchase. By then, you should have other draws such as foundation pour, frame-up, etc. being billed to the lender by the contractor. The lender pays the contractor and you pay interest only to the lender on what ever you have spent with your contractor. They give you ample time to build. When the project is complete and signed off on by local building inspectors, any final bills are paid and the loan, building, land, and all, flips over in to a 30-year fixed or adjustable or what ever permanent financing you have put in to place with the lender. I mention Countrywide because they are one of the few mainstream lenders who have the ability to do the construction loan and still offer many permanent loan programs at the end. You can save money by working with the contractor or whatever arrangements you have with him/her. The lender doesn't care as long as it is built in a timely manner and all local regulations regarding permits are followed and the property qualifies for a certificate of occupancy when it is done.

Hope that helps.

Last year that worked, but not anymore. With the housing market going down, lenders are more careful. Also, major problems have developed with substandard loans, so they are not available. In addition, you want a construction loan, which has always been hard to get even with very good credit. Sorry, but find another plan.