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Using Land as a Down Payment

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Established Member

Using Land as a Down Payment

Is it true that you can use land (owned out right) as a down payment for a home?  If so, how does it work? What if I don't need a down payment (VA) and wish to pay down the interest, is this allowed? Also, the land and house are in 2 different locations.   I've never heard of this, so I think my co-worker was pulling my leg. Thanks for all replies.

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Senior Contributor

Re: Using Land as a Down Payment

I do not believe that you can use separate land as your down payment.  It most definitely can not be used to pay any costs.  What you can do sometimes is use the land that the property is being built on as an equity gift towards the homes value.  For example if the land is worth 20K and the expected amount of the loan 80K, you may be able to use that 20K as a equity gift towards a "down payment".  This does not make your loan any less as it would still be 80K, but they would consider it 80K loan on 100K in value so you would be at 80%LTV (or something like that).  I thin these loans are easier usually with local banks than big lenders BTW.  It just depends on the situation. 
Message 2 of 3
Established Member

Re: Using Land as a Down Payment

Thanks Mickie,

 

I thought it sounded fishy, not to mention complicated.

 

-YesICan42

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