I think your lender is actually inaccurate. I have read about new guidelines which require lot/land loans which are rolled into a construction loan to be "seasoned" for a minimum of 12 months. But if you own the land outright, how can a lender put any sort of time penalty on you? What would be the reason? Hope you built your reserves back up a bit, maybe? Are you using your original purchase price as cash equity you are bringing to the table? Perhaps the lender wants to know the land is still valued that high?? A qualified vacant land appraiser should be able to answer this concern. I dunno. It doesn't make sense to me. If there really is such a rule, I would suggest treating it as a guideline, telling this lender 8 months is long enough, then politely asking if he really wants your business. ~Allen

Your lender might be different, but the price paid for your land is not what's significant. What is significant is what your new house on your new property, will appraise for vs your actual construction costs and what you still owe on your land, if anything. For example, you bought a lot for 50K 5 years ago. Say that today that lot would appraise for 100K. Assume you paid 10K down, and have since paid down another 15K on the land, so you still owe 25K. Now let's say that your house will be built by your father in law contractor for 300K. Hypothetically, let's say the appraisal for your house on your land comes back at 500K. You would owe 300K + 25K to get your house built on your land. If you appraised at 500K then you'd have $175K equity in the property which, depending on your lender, could be used to offset a down payment requirement. In this case it would probably qualify you for a conforming note, a better interest rate, and no PMI. I'm using round numbers which may have no resemblance to your situation, but hopefully you get the idea. That's my understanding anyway, having gone through similar discussions with my bank.

My husband's way of asking the question (below), it might make more sense then my previous question. Thanks for all the replys,I appreciate it. Currently own home, mortgage free. Have been advised I can use the equity of current home toward purchase of dream house (listed at amazing price), with the intention of selling current property (with commercial value) at later date when more valuable. Is this a practical undertaking? What percentage of current property value would be offered as equity? Would I essentially be paying interest on a HELOC on currently owned property while paying off a mortgage on new home?

Talk to your bank. I am in the process of getting a C2P with land I have paid off. What the bank did on the loan was simple. They took my bank accounts, added the value of my land, the value of my current house and called them "assets" Then they subtracted my debt which for me only included credit card debt and real estate taxes but I would assume most may have car loans, mortgauges etc. Using that they came up with a total personal worth. They also compared my monthly income vs the expected monthly payment for repaying the loan. While my payment is going to be about 50% of my monthly income, because my personal worth is enough to cover the entire project, and I have no other outstanding loans and very small CC debt the loan should fly through with ease. I already know this because 4 months ago I sat down with my lender when we got an initial "final" number from our builder and asked her to tell me if I would be approved for that amount or if I needed to start cutting stuff out to get to a lower number. So before I even submitted the final documents I knew what they would give me. Also, at my lenders suggestion, the builder added some extra contigency money to the key contractors bids (framer, excavation, roofer, HVAC) when we submitted the final numbers, so I should have a larger loan approved than I actually need to spend since I don't plan on making any change orders. Every personal situation is different, every bank can be different. Talk to your lender it is the best way to get the answer for you.