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How to calculate your Land Equity for a Construction Loan
Land equity comes in three forms;
*First, gifted land- A family member has offed to gift you land, or they sold it to you at a greatly reduced price, and you have accepted their generous offer. Congratulations, you now have equity in your project! How much equity will depend on the appraised value of your land and the value of your project. Take a look at what other similar parcels have sold for in the last year. Only count the usable lane. A ten acre parcel that has 9 acres of swamp is really a 1 acre parcel, just as an example.
*Second, you put money down on land less than six months ago. Perhaps you purchased the land with 100% cash, made a down payment and have a land loan, or made a down payment on a land contract. In any of these scenarios the funds you invested in the property count as if you brought them to closing. This assumes that the project appraises for the dollars you have in it and the land appraises for the purchase price.
*Lastly, you put money down on the land more than six months ago. The same rules as above apply but now you can get credit ... more

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