Do you require land for the advance payment on a construction loan? We purchased a block of land with money and would like to understand if you can use it as an advance payment whenever we make an application for a construction loan to construct a house.

Do you require land for the advance payment on a construction loan? We purchased a block of land with money and would like to understand if you can use it as an advance payment whenever we make an application for a construction loan to construct a house.

The advance payment needed for a construction or construction-to-permanent (C2P) loan differs but is generally 10% to 20per cent. The good news is that the worth for the land may be used for several or area of the payment that is down.

As an example, in the event that you purchase a block of land for $20,000 in money and wish to build a property having a construction price of $80,000, you’ll need a construction or C2P loan for $80,000. If the post-construction value of your home is $100,000, this means your equity, that will be just like your payment that is down $20,000 or 20percent associated with the home value, which probably fulfills the financial institution’s requirement. Continue reading “Do you require land for the advance payment on a construction loan? We purchased a block of land with money and would like to understand if you can use it as an advance payment whenever we make an application for a construction loan to construct a house.”