Construction loan down payment varies by program — conventional paths often require 20% or more, VA may allow $0 down for eligible veterans, and land equity can count toward your required investment. Exact percentages depend on credit, completed-value LTV, and lender overlays.
Unlike a resale purchase where down payment rules are fairly standardized, construction financing adds complexity — the lender underwrites on the completed value of a home that does not exist yet. That means down payment requirements can be higher and more variable than a typical purchase loan.
Conventional construction-to-permanent loans often require 20% or more depending on lender overlays, credit profile, and loan-to-value on the appraised completed value. VA construction may allow $0 down for eligible veterans when program and lender guidelines are met. FHA construction paths exist in some markets with their own minimum investment rules.
Land equity can reduce the cash you need — if you already own the lot, its appraised value may count toward your down payment. But soft costs, builder deposits, contingency reserves, and closing costs often still require cash beyond the minimum equity percentage. Ryan and Steve run the full numbers before you sign a builder contract.
Down payment percentage is only part of the cash picture — these factors shape your total out-of-pocket at closing and during the build.
Lenders base the loan on the appraised value of the finished home — land plus construction. Your down payment fills the gap between the loan amount and that completed value, not just the build cost alone.
Stronger credit may access lower down payment overlays, but construction files often require additional reserves — cash left over after closing to cover payments during the build and any cost overruns.
If you own the lot outright or have significant equity, the appraised land value reduces the cash down payment required. Ryan and Steve order early land valuations to confirm how much equity counts.
Plans, permits, engineering fees, builder deposits, and a contingency reserve for cost increases are often paid from your cash — even when your equity percentage is satisfied. Budget for these separately.
A clear cash plan prevents delays when draw requests and closing dates arrive.
Step 1
Compare conventional, VA, and FHA construction paths for down payment and cash requirements.
Step 2
If you own the lot, get an early appraisal to see how much equity applies toward down payment.
Step 3
Account for plans, permits, deposits, contingency, and closing costs beyond the minimum down payment.
Step 4
Ryan and Steve confirm exact percentages based on your credit, completed-value LTV, and lender overlays.
Related guides to help you compare options and move toward pre-approval.
How owned-lot value reduces cash needed at closing.
$0 down construction options for eligible veterans and service members.
Conventional construction-to-permanent paths and typical down payment ranges.
Compare programs, costs, and timelines to see if building fits your goals.
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Down payment varies by program. Conventional construction loans often require 20% or more depending on lender overlays. VA construction may allow $0 down for eligible veterans. FHA construction paths have their own minimums when available. Land equity can also count toward your down payment.
Yes — if you already own the lot, the appraised land value may count toward your required equity or down payment, reducing the cash you need at closing. The lender will appraise the land and underwrite based on the completed value of the finished home.
Often yes. Builder deposits, soft costs (plans, permits, engineering), contingency reserves, and closing costs may require cash even when your down payment percentage is met. Ryan and Steve itemize these early so there are no surprises.
No. Exact percentages depend on credit, loan-to-value on completed value, program rules, and lender overlays. Rates, fees, and availability can change without notice. This page is educational — not a commitment to lend.
Ryan & Steve calculate your exact down payment, land equity credit, and total cash needed — including soft costs and contingency — before you commit to a builder. Not a commitment to lend; subject to credit and property approval.