• Gustan Cho

    Administrator
    June 23, 2026 at 8:58 pm

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    Your loan-to-value ratio puts you in a strong and secure financial position.

    Your Current Situation

    • Estimated Home Value: $620,000
    • Current Construction Loan Balance: $155,000
    • Cash Needed: $25,000
    • Requested New Loan Amount: $180,000

    Loan-to-Value (LTV)

    A $180,000 mortgage on a $620,000 home gives you a low loan-to-value ratio of 29%.

    With this setup, you would have about:

    • $440,000 in home value you own ($620,000 – $180,000)
    • Approximately 71% equity

    Most lenders require a higher loan-to-value ratio, so with a 29% ratio, your ownership in the home is very strong.

    Potential Solutions

    Cash-Out Refinance

    If you replace your construction loan with a new mortgage, you could receive about $25,000 in cash after closing costs.

    • Pay off the $155,000 construction loan.

    Construction to Permanent Loan

    If your lender offers a One-Time Close or Construction-to-Permanent Conversion, you may be able to include the extra funds in your final loan.

    Home Equity Loan or HELOC

    Another option is to:

    • Refinance or change the $155,000 balance and
    • Obtain a $25,000 HELOC or 2nd mortgage.

    For most people, getting a $180,000 first mortgage with a 29% loan-to-value ratio is usually the simplest option.

    Criteria for Mortgage Approval

    Lenders usually consider factors like your credit score.

    • The borrower’s average income
    • The borrower’s work history
    • The borrower’s debt compared to income
    • How the home is used (main home, second home, or rental property)
    • Whether the home has its final approval certificate

    Relevant Information

    Use the following information to check your mortgage eligibility and find the best options. Is this your primary residence?

    1. Which state is the home located in?
    2. Approximately what is your credit score?
    3. Are you working for someone else, self-employed, retired, or receiving disability income?
    4. Has your home received its final certificate? With a home valued at $620,000, requesting a $180,000 loan is a careful choice and should meet most mortgage program requirements.

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