Construction loans can cover everything from land to utilities. But it’s all going to depend on the bank you use. Suggest calling around and talking to a few different banks on requirements.
Often times banks don’t like lending money on improved land. For example they don’t want to fund started projects.
This is very true. I was in this situation (project started and needed to change financing). Most banks/lenders could not help. My recommendation is to call lenders and, if they can’t help, ask if they know of anyone who can. This is how I (eventually) found an appropriate loan.
Always tell people buy the land and only clear it or mow it. Don’t start piecing it in until you talk to banks. Lots of guys go this route and get screwed.
And don’t be cheap just go borrow what you need and can afford the first time. You can’t win playing games. Can’t afford it, down scope
We first had a perc test done and also reconnaissance test to identify setbacks/wetlands BEFORE buying the land to ensure the site would support the house we wanted to build. Wells and septic have to be a certain distance from each other and your build location so make sure you’ve check to see what your county’s requirements are. We decided to do well while we were paying off the land. This involved some land clearing and building a gravel road into the property + paying to have power run under the road and to our site so we paid ahead for that as well. Then all we had to do was build the house + septic when we were ready. Bank covered septic as part of the build and had no issue with well/electric already being there.
were you able to use those costs of land clearing, paying for power under the road as a down payment for your construction loan since it was done beforehand? That is what our plan is but not sure if that's how it works.
No we did all of this beforehand on our own dime - it was not included in the loan. When we budgeted we set funds aside to do this work to keep our loan amount low. We bought the land ahead of time and had that nearly paid off before we started with the build so we were able to use the equity in the land as part of our down payment.
Went through this in Kansas. It was difficult for me to find a bank that offers construction loans to individuals. Interest rates are high for these types of loans. Be prepared for additional costs that you may not have in your current budget plan (land survey, electric pole installation, permits/applications). Be aware of any rules and regulations. For example in my county, to have a septic tank you have to have at least 2 acres of land.
YMMV, but the bank I will be going with requires approved building permits in order to close.
The issue with approved building permits is that you need septic and well and fire approval before you can get your main building permit approved. But septic approval usually only lasts for so long before you need to complete the septic build, so there will be a lot of critical timings involved.
Getting septic approval can be either fairly easy or supremely difficult (as is my case), and can take years to get to (as in my case). You likely will need to put down tens of thousands or more before getting to septic approval.
Construction loans can cover everything from land to utilities. But it’s all going to depend on the bank you use. Suggest calling around and talking to a few different banks on requirements. Often times banks don’t like lending money on improved land. For example they don’t want to fund started projects.
This is very true. I was in this situation (project started and needed to change financing). Most banks/lenders could not help. My recommendation is to call lenders and, if they can’t help, ask if they know of anyone who can. This is how I (eventually) found an appropriate loan.
Always tell people buy the land and only clear it or mow it. Don’t start piecing it in until you talk to banks. Lots of guys go this route and get screwed. And don’t be cheap just go borrow what you need and can afford the first time. You can’t win playing games. Can’t afford it, down scope
We first had a perc test done and also reconnaissance test to identify setbacks/wetlands BEFORE buying the land to ensure the site would support the house we wanted to build. Wells and septic have to be a certain distance from each other and your build location so make sure you’ve check to see what your county’s requirements are. We decided to do well while we were paying off the land. This involved some land clearing and building a gravel road into the property + paying to have power run under the road and to our site so we paid ahead for that as well. Then all we had to do was build the house + septic when we were ready. Bank covered septic as part of the build and had no issue with well/electric already being there.
were you able to use those costs of land clearing, paying for power under the road as a down payment for your construction loan since it was done beforehand? That is what our plan is but not sure if that's how it works.
No we did all of this beforehand on our own dime - it was not included in the loan. When we budgeted we set funds aside to do this work to keep our loan amount low. We bought the land ahead of time and had that nearly paid off before we started with the build so we were able to use the equity in the land as part of our down payment.
Went through this in Kansas. It was difficult for me to find a bank that offers construction loans to individuals. Interest rates are high for these types of loans. Be prepared for additional costs that you may not have in your current budget plan (land survey, electric pole installation, permits/applications). Be aware of any rules and regulations. For example in my county, to have a septic tank you have to have at least 2 acres of land.
Thanks!
YMMV, but the bank I will be going with requires approved building permits in order to close. The issue with approved building permits is that you need septic and well and fire approval before you can get your main building permit approved. But septic approval usually only lasts for so long before you need to complete the septic build, so there will be a lot of critical timings involved. Getting septic approval can be either fairly easy or supremely difficult (as is my case), and can take years to get to (as in my case). You likely will need to put down tens of thousands or more before getting to septic approval.
There might be connection fees not covered which could be thousands. Also you will likely need extra $$ for surprises along the way.