Construction to permanent: Down payments...viability? (appraised, mortgage, mortgages, banks)

[Accel Junky]

Hi,

My wife and I are looking at building. We can't find an existing home with both the acreage and the house we want together for a reasonable price, but we know we can buy raw land and have one built for a reasonable price.

The problem I am encountering is that I can hardly find any information out there about what down payments are required these days. I have heard 20% a lot. I have seen some with 10% and I have seen a passing mention of a FHA 3.5% construction loan. There isn't a lot of info out there and I don't want to go talking to banks without having a rough idea if we are even sane for thinking we have the ability to do this.

Has anyone built recently or in process of doing so that could comment on this?

I will provide a little financial info to help:

*Excellent credit scores (750-800+)
*$30K cash for down payment though prefer not to use it all
*Probably will cost $60k-100k for land
*House cost would be somewhere in the $250k-300k range
*So total for the construction to perm would probably fall in the $300-400k range which falls under the affordability calculators for our salaries
*Household income is about $120k with current employers and as high as $140-150k when my wife gets a new job with her new Nurse Practitioner degree ending in May
*Debt is just the current mortgage ($1180/mo - $168k balance - $190-200k sell value) and a car payment ($260 - $13k out of $15.5k borrowed). Zero credit card debt. Zero student loans.

Just trying to figure out if this is a pipe dream or if it is something we could possibly start now. Builders want to know if you can get the loan and banks want to know how much the loan would be for. Kind of need to figure out the rough basics before we talk to anyone...especially with having to take time off just to meet with a banker to establish the possibility.

Thanks!

[davebarnes]

Banks hate to lend money to individuals for land.
Can you buy the land for cash?

See Lot & Construction Loan/Mortgage in CT?

[Accel Junky]

Originally Posted by davebarnes

Banks hate to lend money to individuals for land.
Can you buy the land for cash?

We have the $30K so we could probably nail about 5-10 acres and pay cash. Really want 10-30 acres though.

Assuming we paid cash for the 5-10 acres, that would still only represent a "down payment" of $30K on around $250-300K building cost.

[vermonter16]

My husband and I are finishing a year and a half build process. However, we had already paid for the land free and clear and the shell of the home was already there (which we had paid for). Obviously we ran out of funds....were able to obtain a construction loan based on the appraised value (I'm assuming completed value). Completely different circumstances.... But what I can tell you is that it is not going to be as cheap to build a custom home as you think it is. We've run out of money I don't know how many times....we are at the end now... I guess if we had the chance to do it all over again....we would seriously reconsider and just look a little harder....or keep looking. Are we unhappy with our current situation? No. We love the house, we picked everything for it, we have a great location.... But there were a lot of trade offs. Depending on where you are buying, you might want to check out a local bank.