Thinking about buying land and building your own place in Old Snowmass? The financing can feel more complex than a standard home loan, especially with wells, septic, and mountain permitting in the mix. You want a clear path from lot selection to move-in without costly surprises. In this guide, you’ll learn how land and construction loans work, what lenders expect, the local steps unique to Pitkin County, and a checklist to keep your project on track. Let’s dive in.
Your financing paths
Land loan
A land loan helps you purchase a lot first, then secure construction financing later. Lenders look at how “build-ready” the parcel is. Improved lots with utilities and access often qualify for lower down payments than raw or remote parcels. Expect shorter terms and higher rates than a standard mortgage.
Typical ranges in many markets: 20–30% down for improved lots and 30–50% down for raw land, depending on your profile and the lender. Lenders usually want documented legal access, a clear plan for utilities, and early evidence that septic and water are feasible.
Construction loan
A construction loan funds your build in stages through draws tied to completed work. You generally pay interest only on what you’ve drawn during construction. Lenders underwrite the builder, your plans and budget, and the property’s as-completed value. When the home is finished, you refinance into a permanent mortgage unless you used a single-close structure.
Lenders often require full plans and specs, a fixed-price or guaranteed-maximum contract, a detailed schedule, builder insurance, and contingency funds. You should expect inspections before each draw.
Construction-to-permanent (single-close)
With a single-close loan, you apply once for both the construction financing and the permanent mortgage. This can simplify closing costs and timing. Documentation is more extensive up front, and some products let you lock the permanent rate before you build. For a general overview, review the CFPB’s construction loan resources and consumer guides from Bankrate and NerdWallet.
What lenders look for
Borrower strength
Lenders evaluate credit, income, and reserves. Construction loans usually require stronger profiles than standard mortgages, plus cash reserves to cover payments and contingencies.
Equity and down payment
Plan for meaningful cash in. Many lenders look for 20–25% equity in the total project, sometimes crediting your land value as equity if you own it. Exact terms vary by lender and lot type.
Plans, budget, and builder
You will likely need stamped architectural plans, a fixed-price or GMP contract with a licensed GC, a detailed cost breakdown, and a build schedule. Lenders vet the GC’s experience, insurance, and financials. They will order an appraisal based on the as-completed home.
Site documentation
Mountain projects need more due diligence. Common items include a current survey, topo and geotech reports, septic perc results or sewer confirmation, proof of water source, and recorded legal access. Expect builder’s risk insurance and general liability coverage during construction.
Draw process and inspections
Funds are released in draws tied to milestones like foundation, framing, and finishes. Inspections and invoice reviews are standard. Many loans require a 5–15% contingency reserve.
Old Snowmass factors that affect financing
Permits and timelines
Pitkin County reviews planning, environmental, septic, well, and building permits. Complex hillside or riparian sites may require added studies and can extend timelines. Winters shorten the building season, which can push schedules and costs. Start early with a complete submittal to keep review moving.
Water and wells
Colorado follows water rights rules. If your parcel needs a well, lenders often want proof of a permitted, potable water source or a clear path to obtain one. Learn more from the Colorado Division of Water Resources.
Septic and wastewater
If there’s no municipal sewer, you will need an engineered on-site wastewater system with a successful perc test. Many lenders require evidence of an approved septic plan before funding. See state guidance from CDPHE.
Access and easements
Recorded, legal year-round access is critical. If access is over private roads, lenders often ask for a road maintenance agreement and clarity around snow removal. Clear access supports underwriting, insurance, and appraisal.
Wildfire and environmental
Old Snowmass has wildfire exposure. Insurers and lenders pay attention to defensible space, mitigation plans, and build materials. Sites near streams, wetlands, or steep slopes may need added engineering and mitigation.
HOA and covenants
Some subdivisions have architectural review committees and design rules. Lenders want to know these will not prevent or delay your build.
Timeline from lot to move‑in
- Land purchase: 30–60 days, longer if title issues arise.
- Design and pre-permit studies: several weeks to months for survey, geotech, septic, well planning, and full plans.
- County permitting: simple projects are faster, but complex sites can add months. Seasonal staffing and reviews can extend timelines.
- Construction loan underwriting: about 30–45 days after a complete package is submitted.
- Build time: commonly 9–18 months for custom mountain homes depending on size, site complexity, seasonality, and subcontractor availability.
- Conversion to permanent loan: immediate at completion for single-close products, subject to final inspection and conditions.
Seasonality matters. Plan for slower winter progress, limited utility work windows, and potential inspection delays.
Budget, down payments, and reserves
- Land loans: 20–30% down for improved lots; 30–50% for raw land, with higher rates and shorter terms than traditional mortgages.
- Construction loans: many lenders target 65–80% of as-completed value or 20–25% equity in the total project. Your land value may count toward equity if verified by appraisal.
- Interest and reserves: construction rates are often higher and can be variable. You pay interest on drawn funds, and lenders may require an interest or payment reserve once the permanent loan begins.
- Contingency: build in 5–15% for cost overruns. Mountain sites often reveal surprises like rock excavation or access improvements.
Practical checklist before you commit
- Get pre-qualified for land and construction or a single-close construction-to-perm loan.
- Order title work and review easements, access rights, and encroachments.
- Confirm legal year-round access and maintenance responsibilities, including snow removal.
- Verify water: well permit pathway or district connection. Document rights where applicable.
- Complete septic perc tests or confirm sewer availability.
- Commission a geotech report and a current survey with topography.
- Review HOA covenants and architectural review timelines.
- Select a GC with mountain experience. Collect license, references, insurance, and past projects.
- Finalize plans, specs, and a fixed-price or GMP construction contract.
- Budget for utilities, site work, winter premiums, and environmental mitigation.
Smart questions to ask lenders
- Do you offer construction-to-permanent loans and how do fees compare to two closings?
- What down payment is required for unimproved versus improved lots in Pitkin County?
- Will you count my land’s current value as equity and how is that verified?
- What documentation do you require for well and septic approvals?
- How do your draw inspections work and what is the typical turnaround?
- What contingency percentage do you require in the budget?
- Are you comfortable with seasonal access and winter building schedules?
- What are your approval requirements for my GC and subs?
- Do you require wildfire mitigation or specific materials for insurability?
For independent overviews of construction lending, read the CFPB’s guidance along with consumer explainers from Bankrate and NerdWallet.
Questions to ask Pitkin County early
- What site studies are required for this parcel, such as geotech, wetlands, or slope stability?
- Are there building envelope limits, setbacks, or conservation overlays?
- What are current permit processing timelines for projects like mine?
- How do septic and well permits coordinate with the building permit?
Risks and how to mitigate them
- Unresolved site issues: Secure well and septic approvals and confirm access before applying. A larger down payment or seller financing can help if timing is tight.
- Cost overruns: Use a fixed-price or GMP contract, maintain a 5–15% contingency, and monitor change orders closely.
- Permanent loan risk: If rates or qualifications change, a single-close product can remove the refinance step. Keep your debt and reserves stable during the build.
- Insurance hurdles: Get quotes early and plan wildfire mitigation and defensible space at the start.
- Slow draws and inspections: Choose a lender experienced with mountain projects and keep documentation organized for faster releases.
A local partner for a smoother build
Financing land and a custom home in Old Snowmass is very doable with the right plan, the right team, and early coordination with lenders and county reviewers. If you want a clear strategy from lot selection through lender-ready documentation and local introductions to architects, builders, and inspectors, we are here to help. Start a conversation with Duncan Clauss Real Estate for tailored guidance that fits your goals, site, and timeline.
FAQs
What is a construction-to-permanent loan in Colorado?
- A single-close loan that funds your build through draws, then converts to a standard mortgage at completion after final inspection and conditions are met.
How much down payment is typical for raw land in Pitkin County?
- Many lenders require 30–50% down on raw or remote parcels, with improved lots often qualifying for 20–30% down.
Do Colorado water rights affect my Old Snowmass build?
- Yes. You typically need a permitted well or a district connection; lenders often want proof of a legal, potable water source before funding.
Will my land equity count toward the construction loan?
- Often yes, if the lender accepts the lot’s appraised value as equity and you meet other underwriting criteria.
How long does Pitkin County permitting usually take?
- Simple projects are faster, while complex sites needing extra studies can add months; start early and submit a complete package.
How do winter conditions impact construction draws?
- Winter can slow progress and inspections, which can space out draw requests and extend schedules; plan your cash flow accordingly.
