Using land equity on your FHA or VA construction loan.

If you own your land already you may not have to make a cash down payment. In fact you may be able to roll in any closing costs and/or prepaids. HUD (they write the guidelines for FHA construction, purchase and refi loans) wants the borrower having some kind of investment in the home, cash or land equity.


Land equity comes in three forms. First, if you have your land gifted to you. Second, if you put little to no money down on land over a year ago and it has appreciated. Last, if you made a cash down payment on land within the last year, you will be credited that dollar amount at closing.


The VA is a little different. For some odd reason the VA does not recognize land equity when it comes to rolling in closing costs. The work around is to have your builder agree to pay these costs and simply increase the contract to build price to cover the costs. 


As always, give me a call or email and I will be able to run through the numbers on your personal situation. 

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