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Land & New Construction
HomeForumsLand & New ConstructionHow do construction loans work??
Sarkis Gezalyan's profile image
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Sarkis Gezalyan
  • Member since Nov 3, 2016
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Sarkis Gezalyan
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Sarkis Gezalyan
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Land & New Construction

How do construction loans work??

Sarkis Gezalyan
Posted Jun 3 2022, 15:23

Hello all, 

I've been reading on construction loans but I believe I'm missing the "obvious". To make it easy, let's say I'm looking to buy a 800k home, and expecting to add about 200k worth of work. Can someone help me understand how a construction loan would work in this situation? Would my total loan be for $1million? 

Also, how does the bank cap you off? Do they take a percentage of what YOU think the ARV would be?

Los Angeles County, California
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