Better to use leverage responsibly and err on the side of caution.

Since you are new and an unknown quantity, they will want to err on the side of caution.

Does this scenario presume that potentially erroneous permits were issued prior to construction?

Rather they will "err" on a high side early on.Example of counts I'm talking about: 1,500sf of laminate flooring, 250sf of tile flooring, 300 sf of shower tile surround with 2 inserts for shampoo boxes, 400 linear feet of baseboard, 12 pre-hung interior doors with handles, 30 power outlets and switches, 3 vanities, 2 tubs, 10 recess can lights, 5 ceiling fans, etc., etc. 

@Chad KastelHey Chad,In this instance, I would err on the side of @Caleb Heimsoth's comment, and add - it is not typical to allocate equity or an LPA in this kind of relationship (0%).

@Julius Robinson do the math and if you err on the conservative side things should turn out just fine, if you are stretching to make it work it won't especially if you do not have adequate reserves.

As a lender we err on the side of causesness; it’s much easier to falsify a contract for deed docs than it is a warranty deed transfer, especially after the fact and especially in states that report sale prices.Truth of the matter is we treat contract for deed as we would a lease option.  

One of the hallmarks of our legal system is access, so we err on the side of not making the penalties so severe or "easy" that lawyers forgo otherwise meritorious cases because they're afraid of personal liability. 

Some people will err on the side of caution and not rock the boat while in the middle of securing a loan, but to each their own.You could always chat with the lender to get clarity and make sure you aren't doing anything to jeopardize your prospective loan.

(Please note that I don't mean to be coy with that last comment, but since there's so much "self-promotion" one is allowed to do on BP, I prefer to toe the line & err on the side of caution, plus it's at the top of the search engine page right after the ads.)Thanks!