How is the down payment or loan to value (LTV) calculated?

The down payment or equity needed will vary depending on a few variables such as when the property is purchased as well as the appraised value. Both the cost of the project and appraised value are considered.

Buy land to build or a buy house to tear down & build: The program will allow you to include the cost of the land and the construction cost in one loan (less your down payment). An example of the numbers may be:

Good Appraisal Example

Cost of Land: $250,000

Cost of Construction: $450,000

Total Project Cost: $700,000

Appraised Value: $700,000*

Down Payment: $70,000

Loan Amount: $630,000*

Low Appraisal Example

Cost of Land: $250,000

Cost of Construction: $450,000

Total Project Cost: $700,000

Appraised Value: $680,000*

Down Payment: $88,000

Loan Amount: $612,000*

*The down payment is based on the lower of the two numbers – appraised value or project cost

Purchase a Home and Do an Addition and/or Major Rehab: The program will allow you to include the cost of the property and the construction cost in one loan (less your down payment). An example of the numbers may be:

Good Appraisal Example

Cost of Land: $250,000

Cost of Construction: $450,000

Total Project Cost: $700,000

Appraised Value: $700,000*

Down Payment: $70,000

Loan Amount: $630,000*

Low Appraisal Example

Cost of Land: $250,000

Cost of Construction: $450,000

Total Project Cost: $700,000

Appraised Value: $680,000*

Down Payment: $88,000

Loan Amount: $612,000*

*The down payment is based on the lower of the two numbers – appraised value or project cost

Do an Addition and/or Major Rehab on a Property you Already Own: The program will allow you to include the payoff of your mortgage(s) you have and the construction cost in one loan (less the required equity). As long as you have owned your home for at least 12 months, the appraised value will dictate your equity required. Here are two examples:

Current Mortgage balance: $330,000

Cost of Construction: $300,000

Total Needed at Closing*: $630,000

Appraised Value: $700,000

Loan Amount: $630,000

Your Cash to Close*: $0

*Does not include closing costs

Current Mortgage balance: $400,000

Cost of Construction: $300,000

Total Needed at Closing*: $700,000

Appraised Value: $700,000

Loan Amount: $630,000

Your Cash to Close*: $70,000

*Does not include closing costs

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