A few thoughts. First, it is not that surprising that WaFed won't lend 80% of the total value of the finished home and land. I strongly suspect that it is because, in their experience, there will likely be overages of approximately 10% of the estimated building cost. This is exactly what happened on our home build--we went over the approved loan amount because we made some upgrades during the construction. If you go 10% over, it will put you right where they want it: 80% loan to value ratio.

I would strongly recommend talking to local banks and credit unions regarding a construction loan. I used the largest local bank in El Paso and it was invaluable to have the person approving the draws actually be in an office in El Paso and someone I could talk to easily and who could go to the construction site and talk to the builder. My guess is that all of the major decisions for WaFed on your construction loan will be made by someone out of town at a major service location who handles construction loans for a large region. I could be wrong though. Doing a quick search for Washington lists Umpqua and Timberland as possible options.

I realize that smaller credit unions and banks may not offer construction loans at all, but you should approach the largest local/regional banks in your market in order to leave no stone unturned.

Now, this isn't one of your questions, but the biggest surprise issue with building our home was that I was required to service the interest on the construction loan. The interest is not a big deal in the early months, but our estimated finish date was delayed by four months for a variety of reasons and the amount of interest I was paying was hefty because the construction loan interest rate was higher than the 15 year fixed permanent. I had to dip into my savings account a bit to pay the construction loan interest at the end.