Land Equity As Down Payment of Adjacent Property

Financing, Hard Money Lenders, Private Money
1

I have read many posts re: using land equity as a down payment or collateral for a home loan or construction loan, but still am confused!

I have been gifted a property (vacant land) that was recently appraised at $200,000.
There is an adjacent property with acreage and an existing home that is now for sale.
I do not want new construction, given the adjacent property/home is for sale; most of what I have read thus far discusses using land equity for a construction loan, which is not the case here.

Can I use the equity of the land as a down payment for the adjacent property/home, which is currently listed at $390,000. If so, how much equity will a lender approve?

Thanks so much for your input.

2

You should contact a bank to see if they would be willing to do this for you. We just used two of our paid off properties as collateral for a deal to buy more houses. The equity in those homes allowed us to not bring any money to the closing table.

3

Hi,

First if your intending to purchase the house next door, you can do that with good credit, 2 years tax returns, sufficient income and 3.5% ($13,650) down for FHA loan plus roughly $8k in buyers side closing cost's. Actual closing cost could be reduced by seller contribution to closing cost's.

You could probable convince a conventional lender or private money lender to except the land as additional collaterol which ties the land and new property up together! IE - $390K loan, no down payment but with $590k collaterol! You will still need good credit, 2 years tax returns, sufficient income and closing cost’s!

I recommend you try to do an FHA loan first if this is going to be owner occupied as it leave’s you flexibility as to what you do in the future with the land!

                         GR