Two, you'll have a much easier time obtaining a mortgage product if you have a track record of W2 income.In the meantime, continue implementing the strategies you mentioned: save religiously, build your credit, pay any existing debt owed, etc.

Using a heloc as 1st mortgage really only has a major benefit if you have idol cash sitting around from your paychecks. 

Plus, very important to understand the new layout and how the dig down will effect the existing stairs, plumbing, etc.Happy to connect and talk through your specific situation because @Bruce Woodruff mentioned every project is different and know one price fits all espeically with these complex jobs.Where at in Chicago is your building?

They have the right but not the obligation to do so it already exists.

They will schedule an inspection to verify that the second bedroom does in fact exist in the apartment.

My buddy sold for ~$500k over its existing use value and no contingencies and did not even convey existing tenant’s deposit.  

Are some banks better for mortgages than others (in terms of down payment, interest rate, length of mortgage etc.)?

I still have one house with some existing K&T.

It is usually difficult to take money against it from the bank, it might not be a 1:1 value add - meaning if you invest 100k into an adu it might not raise your value by 100kThat being said, it can be pretty lucrative especially in expensive and sunny CA - since building lots are no where to be found and existing real estate returns are very poor.My partner builds these units.

The denominator in the calculation is your capital/equity and with no debt the return on your existing equity is low.