Can you use paid land for a down payment to have a house built?

Question

Can you use paid land for a down payment to have a house built?

Answer 1

No you can not. Banks do not go by collateral very often. And you can not take out a second mortgage on property.

Answer 2

shut up

Answer 3

You can certainly use your equity in a free-and-clear parcel of land as part or all of the down payment for a loan to build a home ON THAT PARCEL OF LAND.  It is done all the time and shouldn't be a problem.  If the appraised value of the land (per a qualified appraisal--not from a tax assessment) is not high enough, you will need to pay the difference in cash.

Answer 4

If you mean build the home upon the land you already own then I would say, yes, the land would be seen as part or all of your contribution towards your down payment with the amount of course depending on how much the land is currently valued at.  I've done the exact same thing in the past for my home.  May be a different set of rules where you live but it's certainly worth asking your banker about to be sure.

Answer 5

Ummmmm.   I guess so - if you can sell it and get the money out of it.  A down payment is MONEY to reduce the amount that will be financed.

Answer 6

No, you are going to need cash.   Usually you need to have 25% of the cost of building, which you pay the bank upfront for the construction loan.