Property purchase question

[hillcountryhunter]

My wife and I are looking at several pieces of property and trying to weigh out the pros and cons of each. None of them are very large (200-300 acres) but will eventually be our permanent home site (2-3 yrs out). My question is on the down payment. Is 20% about the best you will find or are there loans out there that require less up front? Just trying to decide if some of that cash would be better spent on initial improvements and equipment rather than cash down.

[gandergitter]

Shop your loans. You may be able to get a USDA loan depending on your intentions with the property.

[Fightinaggies]

Raw land you are going to have to put 20% down with anyone.

[hillcountryhunter]

Raw land you are going to have to put 20% down with anyone.

All of the properties have water and electricity established and 2 of the 3 have an old house on the property as well. Of course they would be torn down to build new but it is there right now.

[Chew]

Seems like it would need to be your residence and written up as a mortgage vs. A raw land purchase to avoid the 20% down.

I was blessed to be able to use the veterans land board and put 5% down.

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[Fightinaggies]

All of the properties have water and electricity established and 2 of the 3 have an old house on the property as well. Of course they would be torn down to build new but it is there right now.

I didn't mean raw as in no water and electricity, I meant raw as in just land no house. The only way your going to avoid 20% down is to get a regular mortgage which on 200+ acres your not living on isn't going to happen

[8mpg]

If one of them has a liveable house, you can try a traditional mortgage. USDA is probably a good bet though. If it has electricity and water I believe its considered "improved land" which will still probably get the same financing as raw land. Are you a veteran? Texas Veterans Land Board is a great service to military members and vets.

[drwilliams]

From my understanding Texas Veterans Land Board is a max of 125-150k could have changed by now. I went with Texas Ag Credit and put down 15% on my land. Good luck and shop around.


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[Shinesintx]

Make sure you plot or separate the acre or so your house will be on. That way, you can get an Ag appraisal on the rest of the property. Also, make sure the property you are buying is currently under an Ag appraisal...or you will have to wait 5 years to get it.

[texasdeerhunter]

Make sure you plot or separate the acre or so your house will be on. That way, you can get an Ag appraisal on the rest of the property. Also, make sure the property you are buying is currently under an Ag appraisal...or you will have to wait 5 years to get it.

This. May even need to deed the house and a couple of acres separate and keep the other couple of hundred acres separate so you can use Ag exempt. Not sure if you are close to a Heritage Land Bank, but they specialize in land financing. I have a contact name for a guy if you want to send me a PM

[curtintex]

I've bought raw land with less than 20% down....all the way down to 0%. I know the general rule is 20%, but all banks operate differently and there is no law requiring 20% down on a deal. For instance....if you're buying a piece of land for $1MM that is valued at $1.5MM they go into the deal with equity. Lending institutions are looking for a debt to equity ratio that is favorable to them. If you can prove that you have good equity in a deal, that could certainly reduce your down payment.

[hillcountryhunter]

I've bought raw land with less than 20% down....all the way down to 0%. I know the general rule is 20%, but all banks operate differently and there is no law requiring 20% down on a deal. For instance....if you're buying a piece of land for $1MM that is valued at $1.5MM they go into the deal with equity. Lending institutions are looking for a debt to equity ratio that is favorable to them. If you can prove that you have good equity in a deal, that could certainly reduce your down payment.

This is one of my thoughts. We do a lot of business both personal and business related, with a local bank and have always been on excellent terms. I think I am going to start with them and see what happens from there.

[Mikege1174]

Capital Farm credit was asking for 15% down of the appraised value of the land when I was looking to buy some property.

[2B4Him]

This. May even need to deed the house and a couple of acres separate and keep the other couple of hundred acres separate so you can use Ag exempt.

No need to do anything like that. Pursue ag exemption on all of the land from the start. When you build a house, the taxing authorities will 'carve out' one acre as homestead and remove ag exemption from that. No 'surveys' or 'platting' needed.

[Shinesintx]

No need to do anything like that. Pursue ag exemption on all of the land from the start. When you build a house, the taxing authorities will 'carve out' one acre as homestead and remove ag exemption from that. No 'surveys' or 'platting' needed.

That's good to know it can be done that way.