Points to Acknowledge Before Applying for a Land Loan

Updated: Jun 4, 2022

Written by:

Patrick Cunyus - Loan Originator (NMLS# 2169647)

August 10th, 2021

Financing Land in Texas

As a future landowner, you will most likely have a lot of questions about financing land and available loan products in Texas. You will also want to know the names of the most reputable farm and ranch lenders in Texas, and how to proceed with financing a land purchase. The good news is that there are a lot of resources available to you, and it all starts with a simple call to First Source Capital Mortgage, which will make the process painless and relatively quick for you!

Farm & Ranch Loans

Some of the resources available at First Source Capital include niche lending programs, such as the “scorecard” farm and ranch loan program, with products that are easy to understand and for which approval decisions are quick. Good to excellent credit and solid income will always expedite an approval. A professional mortgage broker or banker at First Source Capital Mortgage (FSCM) will help you sort through the maze of options to find the best fit to finance your own piece of Texas farm or ranch land.

Country Homes on Acreage

Other niche lending products available through FSCM may help you better understand how to proceed with financing raw land and guide your decision process when purchasing a home with acreage. A loan product we call (CHML) County Home Mortgage with Land offers the security of fully amortizing loans over 15 to 30 years, with as little as 5.00% down payment when combined with a purchase money second lien. No loan is too large for this program, and we cover it all from a primary residence or second home on as few as five acres, up to 1000 acres with barns, fencing, and multiple dwellings on the same piece of land.

First Source Capital Mortgage’s creative financing solutions will provide you with all the resources and insights needed to help facilitate the loan approval, closing, and funding process.

Pre-Purchase Checklist

An outline of a few things should be considered before purchasing your next piece of raw land, farm, or ranch, or rural homestead with land including but not limited to:

1. Determine the property is suitable for its proposed purpose

2. Check the history of the property before making an offer to purchase

3. Check the bank's history of lending on the property

4. Verify that the property has access to water, sewer, and power

5. Check the soil condition and composition of the land

6. Consider the location of the property and how it is zoned

7. Make sure the title history is free of any liens or easements

8. Consider property tax costs with the ownership of the property

9. Request an appraisal of the property under consideration

10. Purchasing a farm or ranch usually requires a sizeable down payment to finance the property. Make sure that you are well prepared!

11. Lenders like to see that you have sufficient cash for debt service

12. You need to have up to date financial information for your business and for your personal income

13. Having a plan for the development of your land, or a business plan for the farm or ranch, may increase your chances of getting funded.

14. It is a good idea to take an agricultural lender test or a business lender test to make sure that you understand what you are getting into

15. Lenders may take into consideration any previous experience that you may have in farming, ranching, or both.

In Conclusion

As you have probably already guessed, this is by no means an exhaustive list. This list is intended to set your mind upon your upcoming financial investment and to get the wheels turning in your head, so that when it comes time to “pull the trigger” you will be ahead of the game when approaching a lender.

Every property, whether it be a farm, ranch, or a piece of raw land, is unique (in its own right) and will present its own set of challenges. At First Source Capital Mortgage, we do our best to keep our customers informed and find creative solutions through our lending programs in niche markets like rural financing.

If you have any questions or would like to know more about our unique products and programs, please feel free to contact us toll-free at (888) 484-1256. Ask for Patrick. He’s a good bloke! Until then, happy hunting!