I'm assuming that because it can be moved, the mobile isn't on a foundation... In which case, at least where I live, it does not add value to the land, to my understanding.

It won't.

I would also ask in the Buying and Selling forum. :)

Have you talked to your appraiser and/or lender?

We had this exact situation. It did not affect our using the land as collateral/down payment. The mobile home did lower the appraisal slightly (according to the report), likely because our county strictly forbids two livable homes on one tax lot and this mobile home could not just be hauled away due to an wooden overhead structure. I would expect that this would vary according to your jurisdiction and your bank.

The county charged us to live in the mobile home during construction, then charged us for an inspection to prove it was decommissioned before we could receive our certificate of occupancy for our new house (even though we would be removing said mobile home).

And they say it's expensive to live in Oregon...

We also had difficulty finding course of construction insurance. Many companies disliked the mobile home being there, even though it was already insured (by a company that didn't offer course of construction). One disliked our proximity to the forest. Another disliked the fact that we had miniature horses on the property (those vicious beasts might stampede!) We finally found one that was just right.

ETA: Our property was paid off and the mobile home came with it, so was also paid off. (The mobile was probably paid off back in the 70s.)

Unless the mobile home is paid off, you don't need to go any further down this path at all. You are not going to be allowed to have multiple encumbrances if it is considered real property. If it's personal property, then it adds zero value to anything. It only detracts from the project because it has a note and counts against your debt to income ratio. Also, unless the permitting authorities actually allow two simultaneous residences on the land, this isn't going to happen, period. And its not going to happen at all with zero down payment either. You need some cash reserves. And that can only happen by reducing your debt. Pay off the mobile home, and put it's payment back into savings when that is done. Meanwhile, investigate what zoning and banking will actually allow.

Can you clarify what you mean by 'mobile home'? If you mean a camping or RV type of 'mobile home' that can be regularly towed for vacation, camping trips, etc., and to which you would have a title, like a car, it will add zero value to your property because it's personal property not real property.

If you mean a manufactured home that is intended to be brought to a site, placed on a foundation and permanently connected to utilities, it depends. Once installed on site, the manufactured home owner has a title for the home and it's still personal property. It would not be covered by the lot's title insurance. The owner would then get an affidavit of affixture which converts it to real property covered by the property deed and title insurance; the original title is then irrelevant. Such an affidavit is recorded by the county, etc. and part of the public record. Once this is done, the 'mobile home' can add value to the property depending on its age, condition, etc.

Of course, consult a lawyer to find out how things work in your state.

How will our mobile home affect the value of my land? And we are also using the property value as collateral for the construction loan, since the mobile home can be moved how will that affect the value we can use towards collateral?

I think you are misunderstanding what happens when you use the value of land towards a newly built home.

The appraisal for the land that you plan on using for a build doesn't matter at all. The mobile home could add a million dollars to the appraisal of the land and it wouldn't help you one single bit towards building a home.

The bank will use the appraised value of your new house and lot together to arrive at the total cost/price/value of your new home. They will then use that appraisal to establish the amount that they are willing to loan (as Sophie that new loan amount must pay off any encumbrances on the land). Each bank will have different limits on how they determine the loan amount, most banks will not loan more than 100% of the cost of building a home even if the total value of the house is greater than that (in other words you usually can't get a cash out construction loan).

A few examples of typical situations assuming 80% loan to value and 100% construction cost cap:

Land appraised before build at $100,000, house and land appraise for $1,000,000 = bank will loan the lesser of $800,000 or 100% of the cost to build the house.

Land appraised before build at $800,000, house and land appraise for $1,000,000 = bank will loan the lesser of $800,000 or 100% of the cost to build the house.

The appraisal of the land before the house was on it is moot, the bank only cares about the new appraised value because once built the house is no longer separable from the land. The $800,000 in each would first have to pay any encumbrances (outstanding loans) on the land and the remainder can be used for the build.

If you are planning on subdividing the land and selling the mobile home at another date, it is usually not allowed to be used as collateral for the build loan. Instead the bank would require an equity loan against that property to add cash to the build as needed. If you are planning to keep the mobile home as a secondary residence on the lot then it will be included in the appraisal of the finished lot and home(s) (In this case the mobile home will most likely be steeply discounted as a guest house type structure). If the mobile home is going to be removed after building the new house it will not be considered.

Every bank is a bit different as is every owner. You might find banks willing to lend more than the value of the build, and banks may use different percentages, but the mechanics of the loan are fairly similar in any case.