I wrote last time that this was a great year for building your own home, and I have had lots of requests for financing. One thing I want to point out to people,  is that at this point in time, if you want someone to finance you as an owner builder,  you will need some equity in your land or have some cash. This is a t least true in my market of Eastern Washington. 

In the past, some lenders would finance 100% of your entire land acquisition and construction, but those programs are gone, and you should plan on having 10-20% down payment. The way to figure this is figure how much you need to borrow (estimated cost of construction plus any loan payoff on your land. This is your maximum loan amount.  Divide this by the value of what you are building (cost of construction plus the current value of your land (not what the County  taxes you on).

 For example you bought some land 2 years ago and paid $60,000. It is now worth $110,000. Lets say you still owe $40,000 on this.  Now suppose you want to build a house for $250,000 in building costs.  If you don't want to put any cash in, then you want to borrow the $40,000 to pay-off the lot, plus the $250,000 to build the house. Your loan amount is $290,000.  The value of what you are building uses the current lot value of $110,000 plus the $250,000 in construction, or $ 360,000. We would confirm this number with an appraiser.  So your loan to value is $290,000 divided by $360,000 which my calculator shows to be just over 80%. So a 90% loan program would allow you to add your closing costs and finance everything-because you are using your lot equity as your down payment.  For an 80% program, you would need to bring in a few dollars to get your loan amount below 80%,  plus you would pay your closing costs out-of-pocket. 

People who bought just about any land in Wenatchee, Chelan, Leavenworth, the Methow Valley or Okanogan County 2 or more years ago likely have built up enough equity to build, because our land prices went up and haven't come down.

If you are looking for financing to be your own builder, and you are calling around to various lenders, here is atip to save some time: Instead of telling them about the land or the amount you wantto borrow, or even how long you have been a customer of their bank, just ask, "Do you do Owner-Builder" financing. You will soon find that there aren't many players left in the game.