How is a borrowers down payment calculated, and when is that payment made?
A. A borrower’s down payment is the difference between the total construction costs (including land, closing costs and reserves) and the amount of the loan. Borrowers will receive credit for any prepaid expenses or equity in the land; all those prepaid items have to be documented by paid receipts and or cancelled checks. The balance of the funds to complete the construction are due at the loan closing, just as it would if borrowers where purchasing an existing home.
A borrower’s down payment is the difference between the total construction costs (including land, closing costs and reserves) and the amount of the loan. Borrowers will receive credit for any prepaid expenses or equity in the land; all those prepaid items have to be documented by paid receipts and or cancelled checks. The balance of the funds to complete the construction are due at the loan closing, just as it would if borrowers where purchasing an existing home.
