USDA Loans - No Money Down to Buy Land?

By
Real Estate Agent with Coldwell Banker United, Realtors

First of all, let's be sure we all understand that the USDA loan product is NOT for buyers who want to purchase just land with no money down!

The USDA loan program is a -0- down program for buyers purchasing homes in approved rural areas.

There are over 685 pieces of land for sale in the Fort Hood area MLS listings, and buyers call every day asking how they can buy land with no money down.

The hard fact is, buying land is very different than purchasing a home.   Lenders look at land as less liquid, as harder to sell, and as much riskier than making a loan on a home.

If you are in the market for land for sale around Killeen Copperas Cove Kempner and Ft. Hood, TX and are active duty or a veteran living in Texas, look to the Texas Veterans Land Board for low down payment loans for land.   At this time, they require 5% down, and the interest rate is 7.25%.  Why so high?  Remember, land loans are risky.   The riskier the loan, the higher the interest rate.  You can make a larger down payment and get a lower interest rate, as this lowers the risk for the lender.

Another source for land loans is the Capital Farm Credit Corp.  This company requires a 20% down payment.   The interest rate is driven by your down payment, the location of the property and the terms of your loan.

Commercial banks are another source for money to buy land.  A commercial bank is the one where you do your general banking business.    They usually require 20 to 30% down for a land loan, depending on their review of the location of the land, your past banking history with them, your credit score and your income.

 

USDA Loans - No Money Down to Buy Land?

 

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Contact Mary Ann Daniell for more information   ( 254) 681-4875

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Rainmaker
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Rodney Mason
Prospect Mortgage - Atlanta, GA
FHA 203K, USDA, VA, HomePath Renovation Specialist

Financing for land is definitely hard to come by in this market.  At least you seem to have some options in Texas. 

Sep 22, 2010 04:15 PM #1
Rainmaker
100,204
Mary Ann Daniell, Realtor Killeen Fort Hood Texas
Coldwell Banker United, Realtors - Killeen, TX

Rodney - thanks for commenting!   It is very hard for buyers to understand why lenders are not jumping up and down to make that little bitty land loan!

Sep 27, 2010 03:53 PM #2
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Rainmaker
100,204

Mary Ann Daniell, Realtor Killeen Fort Hood Texas

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