Instead of thinking in terms of down payment it may be easier to think like the Bank. By putting down 10% of Sales price you are trying to achieve a 90% Loan-to-Value ratio (LTV).
In your latest example, if you take your loan amount of $468K and use a $500K Value your LTV is only 93.6%. If you qualify based on all other underwriting standards you can still get a mortgage but you have not achieved your 90% LTV goal that you originally set for yourself.
With regards to your question about the 28K. Please send me your e-mail address (to email@example.com), and I will gladly send you a spreadsheet with the detail of how to calculate Closing Costs. Keep in mind that with New Construction you generally will pay the Transfer Taxes and other misc. items such as water meter installation on behalf of the builder.
You are looking to put 10% down. If you have the builder raise the price of the house to cover your closing costs/prepaids, your NEW purchase price is $520 and a downpayment of $52 ( as you said), you now have 10% invested in the value of the home. The bank is going to LEND you 90% of the appraised value or $468.
If the house appraises for $500, the bank is going to LEND you 90% of that value or $450k. The percentage the bank lends you is based on the purchase price OR the appraised value, whichever is LESS.
$20k in closing costs/prepaid on a $500k purchase?? Now THAT is the amount that makes me curious!
I would really appreciate any response. Thanks.
When using a Sellers Concession to include your Closing Costs in the mortgage, the home you are purchasing must now Appraise for the higher amount (The Sale price including the concession).
Visit the website below to get an idea of what your Closing Costs will be. When buying New Construction you will generally add in the Builder's Transfer Taxes (Not included on the website). You will also be funding your Escrow Account with 2 or 3 months of Taxes and Insurance.
Consult your loan officer as to the max amount that you can add for your closing costs. Also for all other options.
Honestly you would be much better off if you're able to get the Seller to agree to pay all or most of your closing costs.
If you're working with one of the big banks: Wells Fargo, Suntrust, BoA etc you're probably wasting your time, they have been overlaying additional restrictions on all their home loans for some time. You would be much better off if you're able to work either with a credit union or a smaller local bank that does not impose such overlays.
Best of luck to you and I hope you have an exciting 2013.