Loan for Home and Adjacent Lot?

This weekend I went to view several properties in Chicago and one of the properties that I liked doesn't conform to the FHA loan that I am pre-approved for. Basically the seller owns two adjacent lots. On one lot, he has the home which is a 2-unit multi-family building. The second lot is empty and he is using it as his garden/patio/sideyard. Both lots are fenced in together and looks like one contiguous piece of land, but is actually 2 PINs and taxes are paid separately on the properties. I called my loan officer and he said (which I expected) that purchasing both properties together wouldn't work under the FHA 203(b) program. I can purchase the property that has the building under FHA, which would put me close to my max debt-to-income ratio, but as for the side lot, that would have to be on a different loan through a different lender. So I was wondering if anyone has experience with a purchase like this and what kind of loan would I have to get to purchase this second lot separately? I am planning to get a co-signer for this second lot, but my loan officer said that since they've stopped doing lot loans, he wouldn't be able to help me. Are there any lenders in Chicago that do lot/land loans, and what kind of down payment and rate would I be looking at? From my limited knowledge of mortgages (which is more from the finance side), I know that land loans are obviously more speculative, require a higher down payment, and a higher interest rates. But the value of this second loan will likely be at or below $100k. Any help would be appreciated. by elmtreeoptics from Chicago, Illinois. Jul 8th 2011 Reply