Buying a custom lot in Somersett is exciting, but the financing can feel different than a standard mortgage. You want clarity on what lenders expect so you can move from lot shopping to ground-breaking with confidence. This guide walks you through loan options, lender must-haves, Somersett-specific HOA and permitting factors, and a simple checklist to keep you on track. Let’s dive in.
Why Somersett lots finance differently
Somersett is a master-planned community with paved roads, design standards, and established utilities in many sections. Those features often make lots more bankable than isolated raw land because the development risk is lower. Many lenders favor “improved” or pad-ready lots over raw land with no utilities or access, and they tailor terms accordingly. For context on how lot loans work across raw, unimproved, and improved land, review this overview of lot lending basics from HSH and Somersett’s master-planned development background noted by Manhard.
Loan options that fit Somersett
Lot-only loans
A lot-only loan finances the land without the build. Lenders price risk by development status: raw land is hardest to finance, unimproved land sits in the middle, and improved or pad-ready lots are usually the most straightforward. Expect higher down payments and rates for raw or unusual parcels, and more favorable terms when the lot has public water, sewer, power, and legal road access.
Construction-to-permanent loans
If you plan to build soon, a construction-to-permanent loan can combine your lot, construction, and long-term mortgage into one package. Programs vary by lender. Some offer a one-time close option with a single closing and then draws during construction, including FHA’s One-Time Close described by FHA.com. You will need a licensed builder, a detailed budget, and an as-completed appraisal.
Portfolio or private lenders
When a parcel is unusual or timing is tight, a local portfolio lender or private lender can add flexibility. These loans typically come with higher rates, lower loan-to-value limits, and shorter terms. For a neutral overview of private or “hard money” lending, see this background.
What lenders want to see
Credit and capacity
Lenders want strong credit, stable income, and a manageable debt-to-income ratio. Construction and lot loans are scrutinized more closely because the collateral is not complete during the build. Many programs outline minimum credit scores, DTI targets, and documentation standards as explained in this construction loan guide.
Down payment and equity
Down payment expectations depend on lot status and the program type. Improved lots often require lower down payments than raw land. With construction-to-permanent loans, your land equity can typically count toward the required contribution. Plan for meaningful skin in the game so you can clear underwriting with room to spare.
Builder, contract, and budget
Most lenders require a licensed, insured builder with a signed contract, line-item budget, draw schedule, and timeline. Owner-builder projects face extra scrutiny or are not permitted by some lenders. Lenders may also require builder approval and references, similar to the process described by industry lenders like this guide.
Lot, legal, and appraisal
Expect a title commitment, a current survey if required, and verification of legal access and utility availability. Encroachments, easements, or unresolved title items can block funding. Lenders also order a lot appraisal or an as-completed appraisal for construction loans. For a deeper look at why surveys and title exceptions matter, see the American Bar Association’s overview.
Zoning, utilities, and site conditions
Many Somersett parcels carry PD (planned development) zoning that supports single-family homes under community design standards. Lenders will want to confirm zoning, public water/sewer or septic feasibility, and any slope or soils considerations. If a parcel is not on public sewer, a percolation test may be needed; Washoe County outlines septic and site considerations in its planning resources.
Permits, HOA, and approvals
Budget time for Somersett’s Architectural Review Committee (ARC) process and any HOA approvals. Lenders often ask for evidence that permits are obtainable or already in process. Washoe County offers helpful permitting tools and FAQs in its property and development resources, along with an online EZ Permits option.
Insurance during the build
You will need builder’s risk coverage for the construction period and standard hazard/liability insurance per lender requirements. Your builder should also carry appropriate general liability coverage.
HOA, zoning, and permits in Somersett
Somersett has active HOAs with CC&Rs and ARC design standards. Lenders may review HOA documents, dues, and any known special assessments to understand your total monthly obligations. Many lots have public water and sewer, which can simplify underwriting compared to parcels that require a well or septic. Plan your timeline with both ARC review and Washoe County permits in mind, and confirm that your builder understands Somersett’s submittal standards.
Step-by-step: from lot to build
- Confirm lot status. Verify utilities, road access, zoning, and any slopes or soils concerns. Ask for recent surveys, utility letters, and any septic approvals if applicable.
- Choose your path. Decide between a lot-only loan, construction-to-permanent, or a portfolio/private solution based on your timing and risk profile. For single-close options, review programs like FHA’s One-Time Close and compare lender overlays.
- Assemble your team. Select a licensed builder experienced with Somersett and prepare architectural plans detailed enough for an as-completed appraisal.
- Pre-qualify early. Share the parcel profile with your lender so they can price your down payment, reserves, and timeline. Many lenders outline credit, DTI, and document needs similar to those in this construction loan guide.
- Gather documents. Collect pay stubs, tax returns, bank statements, the lot purchase contract, builder contract, line-item budget, schedule, and insurance confirmations.
- Submit and underwrite. Expect appraisal orders, title and survey reviews, and builder approval. Address any title or easement issues early, as noted in the ABA’s survey guidance.
- Secure permits and HOA approvals. Use the county’s permitting resources and the online EZ Permits where applicable. Your lender may condition draws on permit milestones.
- Close and draw. After closing, your lender will release construction draws based on inspection progress until the home is complete and converts to permanent financing.
Avoidable deal-killers
- Buying raw land without a clear plan. Many retail lenders decline raw parcels or require very high down payments. Consider moving directly into a construction-to-permanent path if you plan to build soon.
- Unresolved title, survey, or access issues. Get a title commitment and, if required, a current survey early to identify encroachments or easements that could stop funding.
- Builder not approved. Choose a licensed, insured builder upfront and prepare a fixed-price or guaranteed maximum contract with a draw schedule and timeline.
- HOA surprises. Review CC&Rs and ask the HOA about any pending assessments. Lenders consider dues and assessments in your qualifying ratios.
- Permit or utility uncertainty. Verify zoning, ARC requirements, and utility connection details before you waive contingencies.
Quick checklist for borrowers
- Financials: recent pay stubs, last two years of tax returns, bank/asset statements, and a list of monthly obligations.
- Lot and build: lot purchase contract, architectural plans and specs, licensed builder contract, itemized budget, and draw schedule.
- Property/legal: title commitment, recent survey if required, recorded easements, and septic or well documentation if not on public utilities.
- Approvals: Somersett ARC guidelines, HOA documents, and proof of permits or permit readiness using county tools.
- Insurance: builder’s risk and required liability coverage; confirm with your lender before closing.
Plan for loan limits
If you expect to use conforming or FHA/VA programs, verify the current loan limits for Washoe County. Conforming limits are published annually by the FHFA, and FHA county limits are posted here for Washoe County. If your total project cost exceeds those caps, you may need a larger down payment or a jumbo/portfolio loan.
Ready to talk through a specific Somersett parcel, builder, or loan path? Reach out for a private, straight-to-the-point strategy session with Amy Keiffer with Dickson Realty.
FAQs
Can you finance a Somersett lot without building now?
- Yes, lot-only loans are possible, but lenders often ask for higher down payments and stronger credit than a standard mortgage.
What counts as an “improved” lot to lenders?
- Generally, a lot with legal road access plus available utilities like public water, sewer, and power is considered lower risk and easier to finance.
Can your lot equity count toward the build down payment?
- In many construction-to-permanent loans, existing lot equity can satisfy part or all of the required borrower contribution.
Do lenders allow owner-builder projects in Somersett?
- Many lenders prefer or require a licensed, insured third-party builder; owner-builder requests face extra scrutiny or are not allowed.
What if the lot requires a septic system?
- Lenders typically want a successful percolation test or septic approval and may ask for soils or grading details based on site conditions.
How long does a construction-to-permanent loan take?
- Plan on extra time for builder approval, appraisal, title/survey, and permits; starting early often keeps your build on schedule.
