Make sure you are using an FDIC Fullly Delegated Bank. 

The "fine print" here is fairly sizeable upfront fees and high interest rates, relative to a traditional construction loan from a bank.  

It just means as a Banker I see the banks money as the way to get rich and save your hard earned money for retirement.If you use your money and fail you are broke, if you use the banks money and fail you sell or find a way to transfer the debt.

No, banks do not allow a seller held second now a days due to risk and new guide line changes. 

Quote from @Jason Wray: Jessica,A lot of those moves puts your money into different properties rather than in the bank where it belongs.

As lenders, well issue a prequal/preapproval letter if we've analyzed your income, assets (bank and brokerage statements to establish that you have the liquidity to afford the down payment, closing costs, and reserves), review credit of the guarantors, review the relevant experience to ensure that we're not throwing our money away on newbies that are wandering around in the dark, and have put together a reasonable plan of attack for the project.

When you are dealing with community banks, they actually like to see diversified ownership. 

Federal programs will require you to use GC/licensed folks for a lot of the work and they will get reimbursed by the institution that your loan is with; many GCs don't want to wait on the float time of requesting funds and getting them.Depending on the program and rehab/condition of the home, you may not be required to live in the home (think black mold remediation...bank isn't going to put you in a compromised position) however they may have min/max of when you need to move in.

Horse stable in the middle of LA, 20 acres 1/2 swamp next to major airport in Florida, church with 6 acres in the middle of town, contact bank Trust departments and let them know you want to buy.

Unlike traditional banks, which focus heavily on personal credit and income, portfolio lenders prioritize the cash flow of your property.