Do you require land for the advance payment on a construction loan? We purchased a block of land with money and wish to understand we apply for a construction loan to build a home if it can be used as a down payment when.

Do you require land for the advance payment on a construction loan? We purchased a block of land with money and wish to understand we apply for a construction loan to build a home if it can be used as a down payment when.

The advance payment necessary for a construction or construction-to-permanent (C2P) loan differs but is normally 10% to 20percent. The good thing is that the worthiness associated with the land may be used for several or an element of the advance payment.

For instance, in the event that you purchase a block of land for $20,000 in money and would like to build a house by having a construction price of $80,000, you may need a construction or C2P loan for $80,000. In the event that post-construction value of the house is $100,000, which means your equity, that is just like your payment that is down $20,000 or 20percent regarding the home value, which probably satisfies 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 wish to understand we apply for a construction loan to build a home if it can be used as a down payment when.”