FINANCAL PROCESS OF PURCHASING A UNSERVICED LOT WITH THE INTENT OF BUILDING A HOME ON A PARCEL OF LAND.


  Up front  you can only finance between 65%-75%  of an unserviced lot so you would initially have to have a 25%-35% downpayment, Depending on which lender you use. Also would have to put your own money down or get a line of credit to get the unserviced lot to a serviced lot putting in gas, power, drilling a well these are a few things you would be looking at to get your lot serviced.

Once lot is serviced and you have the house contract in place the land loan can be converted to a mortgage application. At that time the land can be refinanced at 100% less your 5-10% downpayment that you intend to put down on the entire home project.

When you are looking to have a home built on site, you will need to have a contract in place with a builder outlining full costs and specification of materials being used.  There are usually 4 draws in this process.  These draws happen upon completions of these stages – 16 % complete, basement ready for back-fill, 49% complete, Interior ready for drywall,  house 75% complete, and house 100% complete.  There can be some variation on these but this is a good guide.

 Keep in mind that this is the basic process of how the financing is set up for when buying a unserviced lot for the intent of building a home or shop on it. Please check with your bank or your mortgage broker to help you understand more about this process.

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