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Getting a new construction loan to build your dream house is exciting! You may already have ideas of what you want while you scour the internet for the perfect floorplan. You’ve watched enough HGTV you feel like a designing pro. You’ve even acquired the plot of land on which this palace will sit.
You’ll be in need of a construction loan. One of the most common questions we get from people building a new home is whether or not they can use their land as a down payment on their construction loan.
And the answer is: Absolutely! We talked to Arbor Financial Mortgage Loan Originator Laurie Brooks to get some more details on just how it works, and she gave us an example.
“Let's say you have a $50,000 piece of land that's paid for and you're going to build a $300,000 house. The total value (home plus land) is $350,000,” she explained. “So, in this scenario the $50,000 piece of land that you own is the down payment on the $350,000 final value of the home. That’s a little more than 14% down!”
Put simply, if you already own land, the equity that you have in that land can be used as your down payment for your construction loan.
As to the loan itself, Arbor Financial has one of the best construction loans in Michigan. Here’s why:
If you are planning to build your new home, let us show you why the Arbor One-Time Close construction loan is the best construction loan available. You’re building your dream home, and we can help, with features like low interest rates, down payments as low as zero, no closing costs out of pocket, and no payments during construction. You’ll be glad you used Arbor Financial to finance your dream home, and we’ll be glad to help you get there.
* Terms and conditions apply. 0% down payment and no closing cost options based on lot equity subject to appraised value. No payments during construction option subject to appraised value equal to or greater than total acquisition cost including carrying costs during construction.