Construction Loan contract question - deposit required?
We are having built our first custom home.
In the middle of contract negotiation & one item that we are not versed on is that the builder has asked for a 5% deposit towards the construction phase up front.
We would be putting essentially 20% down already by purchasing the land from the builder & borrowing the other 80% of the total package cost from the bank.
This 5% requirement would put things @ 25% no?
Or am I thinking about this incorrectly & that it is still 20% down...just not sure when this 5% comes into play when we are settling with a one time close & the 20% would be provided to the lender/builder then to use at it pleases.
Is this industry practice? or New banking guidelines in the new home environment?
Thanks in advance for any guidance & insights!