My husband and I saving in order to buy land and build. We cannot seem to get a strait answer on how much we have to put down. We think it's 20 %on

Asked by Niccc80, Norton, MA Sat Feb 8, 2014

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15
Robert Hanson, Mortgage Broker Or Lender, Olney, MD
Mon Feb 10, 2014
Hello, There is a great construction loan which allows you to buy the land and finance the construction all at once. This is a spectacular program which only requires 3.5% down based on the land acquisition and construction costs. The qualification is the same as a regular FHA purchase loan. Very few lenders offer this, or even seem to know about it. Feel free to reach out to me if you would like more information on this program! I will paste all my additional contact information below as a "reply" to this answer as it is easier read in that format. Regards, Robert Hanson - robertlh66@verizon.net
1 vote
Yes. I offer the same thing in CA.


Alex Greer
Loan Officer
NMLS #1056079

http://www.TheMortgageOutlet.com
408-352-5147
AGreer@TheMortgageOutlet.com
Flag Wed Feb 19, 2014
That sounds fantastic. Is it offered in CA as well?
Flag Mon Feb 10, 2014
I also offer credit score improvement programs for free while we work on your mortgage.

If you like my answer above, consider clicking on a “Thumbs Up” or “Best Answer”

Regards,

Robert L. Hanson
Gladewater National Bank
First Time Homebuyer Specialist

Direct: 240-752-7549 Cell: 301-651-7822
Email: robertlh66@verizon.net
NMLS# 695929
Flag Mon Feb 10, 2014
Juliana Lee, Agent, Palo Alto, CA
Sat Feb 8, 2014
There isn't a simple answer. Two loan agents working at the same bank often come up with different ideas about how to qualify for the best loan. Furthermore different lenders put different values on each of things that establish your loan qualifications. My advice from building my own new home and from working with my clients who have built new homes is to make certain you have cash reserves to handle any unforeseen problems. Not all of the cost of building a new home is paid up front so your earnings during the year or so it takes to build the home can help pay some of the expenses. In my case I bought an old home, rented it out for a couple years while I developed the plans for my new house, then had the old house bull dozed. Work with a top real estate agent and she will help you find the best lender and help make certain the lender does what they say they will. The lenders I recommend to my clients have on occasion recommended that my client work with a competing lender because the competition addresses their specific needs better. A short diary of my experience building my own house http://julianalee.com/diary.htm ...
Juliana Lee
Top 2 agent nationwide at Keller Williams Realty, the nations largest
Cell 650.857.1000
juliana@silicon-valley-homes-for-sale.com

Over 20 years experience
Over 1,000 homes sold in Santa Clara County and San Mateo County
.
Web Reference:  http://julianalee.com
1 vote
Thank you so much. I will be sure to make good use of the diary you shared.
Flag Sun Feb 9, 2014
John Juarez, Agent, Fremont, CA
Sat Feb 8, 2014
A loan to buy land and build a home or to build a home on land that you have already bought is more complicated by far that a simple mortgage to purchase a home. You should contact lenders – 2 or 3 – in the area in which you want to build and discuss loan programs that may be available to you.
1 vote
Trevolyn Hai…, Agent, Highland, CA
Sat Feb 8, 2014
Because of the risk involved to the lender in such a deal you will probably need at least 50% down- if you can even find a lender willing to loan on land. A better bet would be to find a seller willing to carry a loan on the property & subordinate their loan to the lender that will finance your building. Once building is complete you can refi & pay them off.
1 vote
Chris Hendri…, Mortgage Broker Or Lender, Westlake Village, CA
Mon Jul 20, 2015
A separate conventional lot purchase loan requires 30% down. If you purchase the lot with financing that is part of a construction loan package, you will have to have your portion of the total project cost (typically 20% of the total cost) up front. The FHA program is great for those with limited savings, but the program has a loan limit, which varies by county, that will be exceeded by many custom home projects, and high up-front costs (FHA funding fee).
0 votes
Ruth and Per…, Agent, Los Gatos, CA
Tue Dec 16, 2014
Hi Nic:

Great question, and glad to hear you are focusing on looking to
buy and build, and saving money.

Buying a lot, depends on whether the utilities are connected, is there
a structure on the property etc.

The rule of thumb, is that in Campbell, or Santa Clara County they will need
30% plus depending on Utilities "connected" and road condition to the property.

The bigger issue will be what schools are associated with the home and the Tab
for schools associated by the City.

Good luck and Happy Holidays.
Ruth and Perry.

http://www.ruthandperry.com
0 votes
Mike Hammill, Agent, Los Gatos, CA
Thu Apr 24, 2014
I know some lenders that lend on Land Sales, as much as 50%, call me for details.
0 votes
Alexander Gr…, Agent, San Jose, CA
Sun Feb 9, 2014
Well you are going to have to buy the land with all cash. You will not get a conventional loan for just land. Then once you are ready to build you can get a construction loan and yes you will need 20% down.

Alex Greer
Loan Officer
NMLS #1056079

http://www.TheMortgageOutlet.com
408-352-5147
AGreer@TheMortgageOutlet.com
0 votes
Yes the 20% is for conventional loans if you do not want PMI. Conventional loans are not for land. They must have a property on them
Alex Greer
Loan Officer
NMLS #1056079

http://www.TheMortgageOutlet.com
408-352-5147
AGreer@TheMortgageOutlet.com
Flag Wed Feb 19, 2014
That is what I was afraid of. So there is no way to get a plot of land with a loan? So the 20 percent I have been reading is on the construction loan only. That clears up a lot of confusion, but is also pretty frightening. Your answer has been most helpful. Perhaps this would not be as difficult if we could find a builder to work with that has purchased a development? Then we would be buying a land/home package?
Flag Sun Feb 9, 2014
Elena Talis, , Palo Alto, CA
Sat Feb 8, 2014
I don't think there is one number in terms of the required down payment. The requirements will vary from lender to lender and will depend on your qualifications. I would start working with a local mortgage broker to get pre-qualified for the purchase and to figure out your options.
Web Reference:  http://talisrealestate.com
0 votes
Dorene Slavi…, Agent, Torrance, CA
Sat Feb 8, 2014
It's more then 20% for Raw Land purchases in my state. You will need 35% and it's also not easy to get a loan for Raw Land. Try talking to Commercial Brokers in your area who specialize in Land.
0 votes
Eric Nelson…, Mortgage Broker Or Lender, Campbell, CA
Sat Feb 8, 2014
Niccc,

The answer is it depends on your qualifications. A raw land purchase is usually 30%, and if you are planning on building a residential home, there are some 20% down options depending on when you begin building. I am currently doing a land loan in Morgan Hill where the client had to put 30% down due to her overall qualifications.

How is your credit? Your income will also factor into the equation.

The primary reason that you are seeing a plethora of confusion is that fewer lenders are able or willing to lend on land.

My office is in Campbell, and I am happy to meet with you if you would like some real assistance.

Best,

Eric Olfred Nelson, III
Sr. Mortgage Planner
SVC Funding
408-268-2442
http://www.campbellmortgagebroker.com
NMLS # 120412
0 votes
Stu Carson, Agent, San Jose, CA
Sat Feb 8, 2014
I notice your question came from "Home Buying in Campbell" but your location is listed as Norton MA. Looking forward to talking with you. I'm guessing you are relocating to the Bay Area from New England?

Stu
0 votes
Stu Carson, Agent, San Jose, CA
Sat Feb 8, 2014
Nicco,

I specialize in land to build. Call or email me.

It is an area few lenders work in, and many who say they do, aren't full time at it.

And that is EVEN more true of Realtors.... there are very few that like to work with land and EVEN fewer that based upon their knowledge and experience should.

I work with a few lenders that are able to take you from land loan, through construction and all the way to the "take out" long term loan on the final home.

Call or email me, you will get straight answers on all aspects of your plans.

Stu
408-209-0849
Stu@StuCarson.com
0 votes
Hey thanks Stu. I am looking to build in Kingston, Ma. I noticed you are out of California. Not sure how that is going to work?
Flag Sun Feb 9, 2014
You will not need 50% down.
Flag Sat Feb 8, 2014
Derrick McQu…, Agent, Campbell, CA
Sat Feb 8, 2014
Typically on a land purchase it is 50% of the ltv that lendera will lend.
0 votes
Sue Vaterlaus, Agent, Pacifica, CA
Sat Feb 8, 2014
Go to a local lender. It is impossible to know this answer unless they have all of the details.
0 votes
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