How to Secure the Best Prices and Loan Terms on a Land Purchase

Buying land is different from buying a home. This may seem obvious to some. But if you’re new to the land-buying process, you’re probably wondering how to secure the best prices and loan terms on a land purchase. Luckily, you have a few options for this. Which one you choose will depend on your unique situation. So let’s just dig right into it!

Buy in Cash

Paying for land outright will always get you a better deal than securing a loan. This means paying for the land all in one lump sum. Depending on the specific land you want to purchase and your financial situation, this could be a simple matter. 

For example, a cash purchase for an acre of undeveloped land in Arizona could cost you as little as $5,000. However, a larger piece of land in California with water and electric could cost you much more. 

Obviously, the lower the price, the more likely you can pay outright for it — if your financial situation allows it. This way, you don’t have to pay interest and you don’t have to secure a loan. You get to save time and money. Of course, not everyone can afford to shell out even $5,000 for a piece of land. 

Fortunately, it’s possible to leverage your good credit to get a loan from a third-party lender — and still get the cash price from the seller. 

Secure a Third-Party Loan

When you purchase a house, the lender is secure in the knowledge that the house itself is the collateral. So, in the event that the buyer can’t pay, the mortgage lender can always recoup their expenses by repossessing the house. 

Land is a little different. Houses ‌sell fairly quickly — even when the market is down. But land doesn’t provide lenders with that same peace of mind. This is why it can be harder to get a loan for a land purchase. While there could be several lenders offering competitive terms for a home mortgage, these same lenders may not so readily shell out a loan for land. 

This is where your credit comes in. If you have a good credit score, you should be able to approach a bank or credit union for a land loan. This is best done with an institution that’s near the land you’re looking to purchase. Local lenders have more incentive to see the area thrive. 

And the nice thing about securing one of these third-party loans is that you’ll get the same price from the seller as if you were paying cash. Since the seller gets the full price from your lender, it’s all the same to them. 

Offer a Large Down Payment

If you can’t pay for the land outright with a cash purchase, you can still get a good deal on the land by offering a large down payment. The more you can put down upfront, the better terms you can get. This goes for purchasing through a third-party lender or through seller-financing. 

It’s standard to put down at least 20% upfront. So whether you give this to the seller for seller-financing or to your lender for a loan doesn’t matter. Of course, it’s good to do some research first and see who can offer more favorable terms. 

If you have 30% or 40% to put down, for example, you may find that the seller can offer better terms than a local bank or credit union can. In fact, seller-financing is how many people purchase land, since sellers are often more flexible than financial institutions. 

So if you can’t pay cash upfront, determine how much you can afford as a down payment and see who can give you the best terms on the sale! 

Other Options for Land Loans

While the options above will get you the best deal on your land purchase, it doesn’t mean you don’t have other choices. Here’s a quick look at some other possibilities for land loans. 

• USDA Loan – For those purchasing land in rural areas, a USDA loan could be a good way to go. There are a few different loan programs offering favorable terms for farmland and rural housing. You can check them out on the USDA website. 
• Construction Loan – If you’re planning on building a house on your land soon after you buy it, you could qualify for a construction loan. These are short-term loans designed to help you get the home construction done. And afterward, you have the option to refinance it into a regular mortgage.

Get The Best Deal Through Land Elevated

Here at Land Elevated, we own all the land we sell. This means you don’t deal with a third-party seller who may or may not give you favorable terms. This allows us to give massive discounts for cash payments. And remember, if you leverage your good credit to get a third-party loan, that’s the same as a cash payment. We also offer excellent discounts for large down payments!

To find your dream land, check out our property map or give us a call today. We have Land Specialists standing by that can help you through the land-buying process. No high-pressure sales tactics. No opaque dealings. With Land Elevated, you know exactly what you’re getting. We’re here to help you navigate the buying process — even if it’s not through Land Elevated!