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Common Ground
Farm Credit Services of America Blog

Financing options for buying now and building later.

by FCSAmerica Staff Reports | May 16, 2018

rural home lotThe perfect home in the country often begins with finding the perfect property. With a home site loan, you can buy your land now, and build your dream home later.

Home site loans offer many advantages. But some of them require finding the right lender for your project.

Use Land Equity for Construction: Buying a farm, lot or acreage when the location is available can protect you from rising land values. It also is an opportunity to leverage any land equity for future home construction, possibly reducing your money down.

No Acreage Limits: While many lenders offer lot loan programs, some shy away from financing home sites that don’t fit within certain thresholds, referred to as “nonconforming” properties. Talk to lenders about their ability to finance any sized lot and their familiarity with rural features, such as outbuildings, crops or septic systems that often other lenders aren’t.

Straightforward Application: Home site loan applications generally require the same financial information as other loan packages, including the past two years’ tax returns, most recent pay stubs and an updated balance sheet. No construction plans or contracts are needed until applicants are ready to secure financing for new home construction.   

Flexible Construction Periods: While many home site borrowers are ready to build within five years, it’s important to have flexibility, in case of delayed dreams. Make sure you understand your lender’s expectations and ability to accommodate your schedule. This is particularly important for agricultural producers, whose property purchase also might be tied to their agricultural production and income. 

When it comes to buying land and building a new home, working with the right lender is as important as finding the right property. Click for more information about rural home construction and lot loans.

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