Buying Land for Future Build

[HogHunter34]

My wife & I keep entertaining the idea of buying small acreage locally with intentions to build a home within next 3-5 years. What’s going rates for financing? How comparable to mortgage rates?
What options to do with land prior to build to help lower tax rate? What to look out for while searching? Thanks in advance to inputs & advice

[LlanoHunter10]

We have 25 acres in llano financed through Capital Farm Credit. We got a 20 year loan at 5.35%. We get tax exemption by leasing our property for grazing rights to cattle. Cattle owner has key to property for attending to cattle. You can also apply for wildlife exemption as well for tax reduction. We plan on building on property in 10 years or so.

[HogHunter34]

We have 25 acres in llano financed through Capital Farm Credit. We got a 20 year loan at 5.35%. We get tax exemption by leasing our property for grazing rights to cattle. Cattle owner has key to property for attending to cattle. You can also apply for wildlife exemption as well for tax reduction. We plan on building on property in 10 years or so.

You mind me asking is there a certain % down stipulation to get that rate?

[tradslam]

I’ve done this a few times over the last 2 years, with small acreage. Best way to get in the game With no money, that’s I’ve done so far. I purchased land with a zero percent interest credit card (12 months until the interest kicks in) Mortgaged a small double wide (any type of cheap residence that the banks will finance) held until the bank will cash out refinance, then repeat.

Obviously you need the right property layout, if your going to live on it one day. But it’s a basic free way to get in the game.

[Pineywoods]

From our experience, most land loans require 50% down.

[pervis]

Capital farm credit usually wants 20 percent down

[newmathewsfan]

Capital farm credit usually wants 20 percent down

This has been my experience as well. I’m looking at approximately 30 acres and that’s what I was told for down payment.

[Dirtymike]

20 % down unless you go thru Veteran land loan.

[LlanoHunter10]

You mind me asking is there a certain % down stipulation to get that rate?

20% down payment thru capital farm credit to get that rate.

[wes122984]

Texas needs some better lending options. Oklahoma has 0% down options and up. I applied with the 0% down and was approvd with only stip of 30 days paystubs.

Ended up using a local bank and it came out to about 10% out of pocket at closing. They actually have a branch in Sherman, Tx so they prob do lend in Texas.

[Biggs]

It’s my understanding that the land must be used for Ag 5 years before the Ag exemption kicks in? Is there any way around that?


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[Bud Ellis]

raw land is 20% down if there is a dwelling on it its 10 to 15% down .

[BitBackShot]

It’s my understanding that the land must be used for Ag 5 years before the Ag exemption kicks in? Is there any way around that?


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No, if it wasn't in Ag when you bought it, it'll take you 5 years to get it. And you can't get the wildlife exemption without getting the Ag first.

[Antlers86]

I bought 90 acres raw land 10% down 10 yr note at 5.0%

This was in 2017 with a local Credit Union. I pay $1200/month payment and an additional $1000-$1500/month principal to pay off sooner. I do have a balloon payment at the end of my 10 yr note but should be eliminated if I stay on track with principal payments.

Mine was under AG for previous years. I switched over to Wildlife and pay $100-$125 yearly.

[kumathebear]

From my experience in land sales, now retired, lenders have various rates based on your credit score and debt to income ratio.

I just helped out my old company with land sales a month ago and they had 3 lenders on site for 5-20 acre sites: with the exception of the TVLB, Texas Veteran's Land Board, they had 15 & 20 % loans available.

If you are a Veteran with honorable discharge, TVLB begins at 5% down but can be more again based on credit & debt to income ratio.

Land loans typically require more down and a higher interest rate than a simple mortgage with a dwelling. The reason is lenders consider land loans higher risk. Default is more common with just land loans, so can walk away from dirt but not so much with a home on it.

Good luck and do your research, compare rates, etc. Happy Holidays!