I talked to a couple of banks. We have used Wells Fargo for our last two mortgages. They will not do a land loan at all, they would do construction but not until we sell and they would require a substantial down payment. I talked with a local bank that would do a combined equity line on existing home and land loan. The land loan would be amortized over 20 years with a 5 year balloon. Not a bad option. At this point I need more info, need to get a realtor in to see what we can put our existing house on the market for, need to get some numbers back from the builder I am looking to work with, and a second builder to get a cost comparison. I am hearing that things like concrete are through the roof right now? But who knows. I plan on doing a lot of work myself, insulation, painting, floors, cabinets, much of the trim, my dad is going to do the electrical. Hoping I can make the numbers work.

New bank does construction loans all the time and approved us even if the loan to value goes above the 80% as our finances are all sound. They understood contingencies, overruns, etc, and will actually be doing $600k so there’s a little bit of buffer. Spoke with the initial bank rep and bank manager today to close out the loan and they both apologized, with rep even saying they were a little worried about other things that may pop up down the road if this had already started with first disbursement - so I think we may have actually avoided a train wreck down the road.

It is very hard to get funding for construction. I am an architect, in a not popular company in Florida. I always wanted something more but it is hard to get up in this domain without experience. I am getting a lot of orders and I need to make the best project to approve my building. I spend nights in a row just to make the layout of the building. I try to make my layout impressive so I always to it very big and tall. Sometimes I can use Mi tower hire just to finish it. The size of the layout can impress the investors and choose your project to become real.

I am constantly amazed that loan officers are not better trained on construction loans, but they aren't. Finding one who really understands them seems to be like finding a five leaf clover. ---- When you buy land you have equity in that land, currently yours appears to be around $67,500. That equity exists because you could sell the land for $67,500. However, once you build a house on it, that equity goes away as a divisible portion of equity and your house and land together get their own combined equity. That equity is also based on what you can sell the house and land for. When building that is the appraisal. Just because we know build costs, doesn't mean we know appraised value. The house that you are spending $350,000 to build could appraise for $350,000 total, in which case you have no equity. On the other hand it could appraise for $450,000 and you have $100,000 equity. Or it could appraise at $417,500 and you have $67,500 equity. ---- Next you need to know the bank's loan to value (LTV) this will govern the amount of loan you need and the money you have to put in versus the amount of equity they will count. So for example, if you have 80% LTV and the home appraises for $350,000 the maximum loan amount is going to be $280,000 ($350,000*80%) and you will need $70,000 more. On the other hand if it appraises for $450,000 the maximum loan amount is going to be $350,000 ($450,000*80% = $360,000 but likely capped at build cost), so you may not have to add any money. Banks have different policies on LTV so it might be higher or lower than 80%. For example, my bank will do 90% LTV (which is great), but caps at 95% of build cost (which means I am required to bring at least 5% of build cost in). I didn't look at your specific numbers, I can take a look at them if you need, just let me know if you still need me to. ETA: To answer one of your questions above. Your land equity will not reduce your house's cost to build. It will increase the value of the house and land together and result in your having to add less money.