Buying a lot from a builder

I would imagine the builder is not going to sell you a lot for you to sit on very long if it's a desirable community. The CCR's of subd may have restrictions for timeline as well. Always always always read covenants before you build in HOA/restricted development. This sound like the type of community where purchasing the lot means you are ready to start drawing or have plans ready to be bid out and start construction.

If you're going construction to perm you'll need to know total cost of project and submit to lender. If approved, you'll be required to put 10-20% down of that cost. First draw from lender will be to secure the lot. From there your builder will make random draws based on % of completion of the property. Once completed and appraised, lender will convert to permanent loan

Your first step should be a very informal idea of a total cost and get preapproved for that amount. Builder will require it anyways.

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How does this usually work?

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In my experience the builder will require a deposit to begin construction. You'll agree on a set of plans and price.

Pro: It is easy to finance b/c the builder finances the construction and you just buy the home after construction is complete.

con: I've seen the builders able to charge more for a package deal b/c it isn't like you are getting multiple bids. They are usually dictating the terms and you are along for the ride.

Pro: The builder will most likely keep you in line with the allowances so you don't overbuild for the subdivision.

Con: You will most likely have less control over the design of the home. Most of the time builders have plans already chosen or he may limit what you can do. Sadly this can somewhat be a positive b/c many first timers to construction have no idea what works and doesn't work.