Rule 25-202-2.4 - Loan for constructing a homeWhen a veteran applies for a loan to construct a home, the veteran may or may not already own the land where the home is to be constructed.
A. Land owned at the time of application: When the veteran owns land on which he/she plans to construct a home utilizing funds of the Veterans' Home Purchase, the land must be fully paid for and unencumbered. This land may be considered for the initial payment of twenty percent (20%). The twenty percent (20%) initial payment will be based on the amount of the original purchase price of the land in question. Original purchase price must be evidenced by documentation from the veteran borrower. Equity due to a gift of the land, appreciation since purchase, or purchase below market value will not be considered an initial payment of twenty percent (20%).B. Land not owned at the time of application: When the veteran does not own the land and intends to purchase the land as a part of the construction process, the veteran must invest a cash outlay or twenty percent (20%) of the total construction cost of the finished product including the initial land purchase. Equity due to construction below market value is not considered a cash investment.C. Land mortgaged at the time of application: If the lot or vacant land is secured by a mortgage note with a lender or individual, the Veterans' Home Purchase Board may payoff said mortgage note as long as the mortgage note does not contain a prepayment penalty, and the payoff of the land and construction cost of the home do not exceed the statutory limits of the Veterans' Home Purchase Board. If the veteran owns land and has an existing mortgage note made for the initial purchase, any equity realized from the initial down payment and/or regular loan payments on the note may be considered as a part of the cash payment requirement of twenty percent (20%). This initial cash payment will be derived from the difference in the current payoff of the mortgage note and the original purchase price of the land in question. If this difference does not equal twenty percent (20%) or more of the total construction cost including the land mortgage note payoff, then the veteran will be required to invest additional cash savings to arrive at the twenty percent (20%) initial payment necessary to meet the requirements.25 Miss. Code. R. 202-2.4
Adopted - February 16, 1995; Revised - December 8, 2000