I am going through this right now. I go to settlement on the 27th of March. Here is what I did. I bought a 1-Acre waterfront lot with a small 1,000 sq. ft summer home on it. It needs to be bulldozed and a new home built. I looked for someone to do the construction to permanent loan mortgage, after a good two weeks of looking I was not too happy with any of the programs. Constructions to permanent loans are difficult and not too attractive and the interest rate was not very competitive on the permanent loan. Because of the time limit to obtain financing on my contract I had to go a different way. I got a conventional loan for the current lot and house, which required only 5% down, plus closing costs. One catch is that under FannyMae underwriting, mortgage companies like the improvements on the property to be valued at 60% of the total mortgage. Because this 1-acre is on the water this loan did not meet that criteria, it was only 30% improvements, so it had to go through manual underwriting which is a little more difficult because the underwriter manually goes through the entire loan. But it was not as hard as some I’ve been through. Prior to going this way I spoke with a local mortgage company who indicated that once I own the property they will give me a new mortgage based on “stated value”. This mortgage company indicated that it is easier to do once you own the property. The stated value is what an appraiser indicated your property will be worth which will give me the money necessary to build the new home without doing scheduled draws like a construction to permanent loan. Sorry to pontificate here but this was not an easy process. Bottom line is that I had to get the property first, then I dealt with the improvements. Best advise I can give Good Luck!