How Land Equity Works With a One-Time Close Construction Loan
If you already own the land where you plan to build, the equity you have accumulated may help reduce—or potentially satisfy—the required down payment on your One-Time Close construction loan.
If you Own the Land Outright
The available equity in your land may be applied toward the required down payment and your total investment in the construction project.
If You Have an Existing Land Loan
At closing, funds from the new One-Time Close loan can be used to pay off the remaining balance on your current land loan or land contract. The land and construction financing are then combined into the new loan.
How the Refinance Structure Works
Because you owned the property before applying for the construction loan, the transaction may be structured as a refinance. The final loan-to-value ratio is generally based on the new loan amount compared with the appraised value of the land and the proposed improvements once construction is complete.
This structure may allow you to put the equity you have already built in your property to work immediately—without having to provide the entire down payment in cash.
*Loan structure, available equity and qualification requirements are subject to the specific loan program, appraisal and underwriting approval.*