It doesn't matter what "most financial institutions" will or will not accept.

The only one that matters is the one that's funding the construction loan or the mortgage.

So it can vary depending on the bank. But every major bank I've spoken to will allow this as long as you have invoices, receipts, cancelled checks, etc. Some banks won't give direct credit but will allow you to put it in your contract as "paid" with the builder and that can go towards your down. But the amount down will vary a great deal too. 20-40% is what I'm finding right now, but definitely talk with your credit union and see what kind of paperwork trail they want to see. Sometimes it takes a while to get proper invoices and receipts from contractors! ;)

Thanks for the replies. I figured I'd have to ask them specifically, but just wondered what were others experiences in the mean time. :)

We haven't signed a contract with a builder yet. Once we decide on one, I wonder if they'd put the clearing costs in and show them as paid. The builder we are leaning towards knows we're clearing the land right now out of pocket, so he wasn't going to include that in the price he gives us. Not sure if he'd add it back in.

Our credit union requires 10% for a construction to perm loan, and we will likely put 15% down. It just dawned on me today that this might be a possibility to make more of a down payment and possibly cut out PMI.