Convention 80% With Purchase of Land

The following example is for "self-built" construction loan without purchase of land.

Example 1: 80% Financed to purhcase land and do construction

Land Value: $ 200,000
Construction: $300,000
Total: $500,000
80% Loan to Value
Total Loan = $500K x 80% = $400K
Stages 40%, 70%, 100%

Draw #1 - Purchase the land
65% x $200,000 = $130,000 provided by lender to purchase lend
35% x $200,000 = $ 70,000 prepared by borrower
Advanced Fund # 1 = $130,000

Draw $2 - 40% completion
Total Construction Loan = $400K - $130K = $270,000
$300K x 40% = $120K
$300K x 40% x 10% lien holdback = $12K
Advanced Fund # 2 = $270K - $120K - 12K = $105,000

Draw #3 - 70% completion
$300K x 40% = $90K
$300K x 70% x 10% lien holdback = $21K
Advanced Fund # 3 = $270K - $90K - 21K - (105K advanced fund)= $54,000

Draw # 4 - 100% completion

$300K x 0% = $0K
$300K x 100% x 10% lien holdback = $30K
Advanced Fund # 4 = $270K - $0K - 30K - (105K + 54k) = $81,000

Total Fund Advanced for Land Purchase = $130,000
Total Fund Advanced for Construction = $240,000
Total Lien Holdbacks = $30,000

Total Loan Amout = $400,000