Is someone gifting you the land you're going to build on? Great! The FHA construction loan program allows you to use this as your down payment and even let you roll in closing costs. FHA does require that the land donor state, in writing, that this is a gift. The donor must be a family member or close friend.
If your gifted land is a freestanding piece of land, with no liens, it's own legal description and tax id number, then you are all set to build. This assumes that it meets all local and state requirements for a building permit. If, however, your gifted land is part of someone else's land, and/or has a lien on it, you have some work to do before breaking ground. Let me explain by using a common example I dealt with over the years.
Your Grandparents have a home that they bought 20 years ago. It's a large lot, several acres, and they have a small mortgage left on the home, let's say $50,000. They would like to split off a part of the land and gift it to you to build on.
Your first step is to find a survey of the lot and where the current home is placed. Have the local building department review it to see if the lot you're splitting off, and the remaining home/lot, both meet their building requirements. This will just be an informal review.
For a formal approval you will need to hire a surveyor to survey the existing lot and come up with legal descriptions for the vacant lot and the new lot. If the local government approves your split you will then have two lots, each with their own legal description and tax id number.
Now you have to get the lien removed. Keep in mind that the mortgage lien is not just on the home, it's on the land as well. All of the land, no matter if you split off a portion or not. So your new lot has your grandparent's mortgage lien on it. The FHA construction loan program will want to have the first, and only, lien on on the property. So this mortgage lien needs to be paid off or removed by your grandparent's lender.
The lender should be willing to remove the lien if they feel they have sufficient equity in the "parent" lot, the lot your grandparents still own. You would need to call the lender, explain the situation, and request an application for a "partial release of lien". This is not a common request so you will need to be persistent and ask for a supervisor.
There can be situations where you are not going to be able to pull this off. The lot may be too small, it may not have enough "frontage", the lien may be too large. My suggestion is that you call me or your builder. We can help walk you through your situation.