You’ve found a piece of land you want to buy, but can you get a loan for land?
In this article I’ll reveal 6 different sources of financing you can use.
And feel free to combine them to get all the money you need.
Now, let’s get started…
1 – Go Where the Money Is
The obvious place to ask for a land loan is in the bank.
They will look at things like the value of the land, how easy it is to sell and your plans, to find out if they will lend you money for it and how much.
Generally speaking it’s easier to get a loan if you plan to build on it and you have solid plan (get a professional to survey the land, make sure your plan doesn’t violate the local zoning laws and have deals with the necessary contractors in writing).
You should be able to loan at least 50% of the value of the land and most likely more than that (up to 80% can be realistic depending on your project).
Be sure to get several offers as the terms and price can vary a lot. And know that a local bank is more likely to work with you as they know the area and are in a better position to determine their risk.
2 – Let’s Work Together
Credit unions is a great alternative to banks.
They can offer competitive rates, because they are member owned and don’t have to generate a lot of profit to shareholders.
Plus they often have an interest in sustainable or local development.
So if your plans are aligned with the mission of a credit union, they will often do a lot more to help you out than a bank.
3 – Can You Get a Loan for Land from the Government?
If you have low income and your piece of land is located in a rural area, then you might qualify for the U.S. Department of Agriculture’s program for low-income borrowers called Section 502 direct loans.
These loans exist to promote thriving communities and improve the quality of life in rural areas.
So they have very fair lending terms and are in many cases what makes home ownership possible for low income families.
Read more about Section 502 direct loans here.
4 – Buy Now Pay Later
The seller wants you to be able to buy the land.
So he/she might be willing to help you finance the purchase.
Just ask – the worst that can happen is getting a no.
Seller financing is often used for the difference between what you’ve been able to come up with from other sources and the final price.
But it could just as well be used to finance the whole thing, if seller is up for it.
5 – Leverage Other Assets
If you are unable to loan against the land you want to buy or can’t get all the money you need, then you might be able to loan against other assets you own.
Do you already own a home?
Then a loan against your home equity could be the way to get the best terms and lowest interest.
Do you own a business?
Then you might be able to get a loan using the business as collateral.
And the same goes for insurance and other things of value (art, cars etc.).
6 – With a Little Help from Your Friends
And last but not least.
Can you get a loan for land from friends and/or family?
Friends and family can be a great source of financing.
They already know and trust you.
So they will often help, if they can.
But be sure to get a clear agreement in writing, to avoid misunderstandings down the road.
At the beginning of this article you might have been wondering…
“Can you get a loan for land?”
And now you know 6 sources of financing you can use.
So go out and make your dream come true (using one or more of these sources).