Jeff,

It's probably almost impossible to find a lender that will finance 100% on a land loan, most want 25% down to reduce their risk. Additionally you'll find that you can't get a conventional mortgage on a piece of land (forget a 15- or 30-year loan.) There are programs out there where you can get a short-term loan (one year) under the premise that you will break ground within that time period and roll the loan into your construction loan and then ultimately your permanent mortgage. They are usually a few points over prime rate and you can find ones that only require you to make an interest only monthly payment, but you'll have to come up with the 25% down payment.

My suggestion to you would be to put the equity in your current home to work for you. If most of your net worth is tied up in you current home then do a refinance and take out enough money to pay for the lot in cash. This will have two primary benefits:

1) You'll be able to buy the lot now before someone else does and you can build on it when you a truly ready, not rushing to do something by the banks schedule. Plus you'll only be paying around 6% interest, not 8-9%.

2) When you go to get your construction loan, it will be a lot easier because you already own the land outright and you're not trying to finance the whole package. Think of the value of the land as a 100% equity down payment, which hopefully will increase in value between the time you buy it and when you ultimately are ready to start construction. Banks love to loan money when you have a huge down payment because it reduces their risk.

Hope this helps,

Chuck

Jeff,

I do renovation and construction loans exclusively, and Chuck pretty much responded correctly.

I can loan up to 100% on land purchase plus construction and even have no payments until construction is completed. You'll pay a max one point (maybe nothing), it's interest only at a rate up to 1.25% below prime (current;y that would be 7%)... all very attractive but... as Chuck mentioned, we cannot close on that loan until you have your plans and specs and a bid for the construction, and the bid has to be from a GC.

The suggestion to acquire the property now by taking equity out of your present home to purchase the land, is right on as well.

Good luck!

Tim

Jeff,

I agree with both posts and want to throw this out. Look for a local community bank, especially in a rural community - not big city - that specializes in raw land financing. I got a loan on 12 acres of unimproved property for 100%, 30-year payout with a 5-year balloon. I will build before the five-year mark. In my case, it worked because the property appraised higher than the purchase price. Just a thought if you think you can get the property at the right price. Just wanted you to know that it is possible. BTW the interest rate is 8% but, I wasn't able to take out a home equity loan and I got the property I dreamed of. Good luck!