I am assuming when the loan officer denied the loan based on D to I that an AAN was sent.
Now that he has come back in to offer additional information, I would considered this a new loan request and base the decision on the information you now have. Since he is building a home, I also assume that will be your collateral, but if you want additional collateral, there is nothing keeping you from making a conditional approval.
You can tell him you may be able to grant him a loan under the following conditions and spell them out. If he declines the conditions of approval, send him another AAN with the reason why you denied his loan request.
The opinions expressed are mine and they are not to be taken as legal advice.