Absolutely! In fact, you can even build a new home with NOTHING DOWN if you meet certain criteria!
If you own your land (even if there is a loan against it) or will be getting land given to you from a relative, the equity in that land can cover your entire down payment and many times even your closing costs. The minimum is to have at least a 3.5% down payment. Look at this example:
a. Your land that you own free & clear appraises for: $10,000.00
b. The total home price with site work from Homestead Oak is: $85,000.00
c. You add land value to the cost of the home which equals: $95,000.00
d. times 96.5% (max that the Bank will lend)= X 96.5%
$91,675.00
You only need to borrow $85,000 + closing costs. If you only need 3.5% down, that means you can borrow 96.5% of the total of $95,000. That gives you a max loan amount of $91,675 which is more than you will need, therefore, in this example, you would not need any additional money down to build a new home!
Simply put the Bank will loan 96 ½ cents for each appraisal dollar.
If you do not have enough equity in your land or will need to purchase land to build on, you would need to come up with enough money to equal a 3.5% down payment. The good news is that you will not need anywhere near 20% down to build a new home!
Article submitted jointly by Toni Ciccarelli/Huntington Bank &
Mary Darkmoor- Sales Consultant/Homestead Oak Inc.
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