re: Custom Build Finance Questions

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Equity in Current Home: $65,000
Equity in Property to Build on: $35,000
Property Value: $90,000
Total Estimated Equity: $100,000 that would be rolled into construction/permanent loan

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Don't think any of this will be relevant when getting construction loan

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Estimated Build cost $400,000
20% would be $80,000

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Have you gotten this build cost under contract? Have plans and a builder selected? Need to get this ironed out first.

Also most banks will loan based on the appraised value of your future home. If it appraises for higher, less down payment. If it appraises for less than your build cost. You will need a bigger down payment.

Also some do as low as 10% of appraised value.

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Since I have enough equity to cover the 20% typical downpayment for custom build do I need to build a larger cash reserve or would it be more prudent to aggressively pay down the lot loan over the next 12-15 months. Or does the 20% have to be in cash reserves?

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They wont roll over your equity. They will want cash.