Buying land is a dream for many people—whether it’s for building a custom home, starting a farm, or holding a long-term investment. But purchasing land is very different from buying a home.
This step-by-step guide explains how to buy land in 2025, covers financing and seller financing options, and highlights key stats and risks to know before you buy.
Why Buying Land Is Different From Buying a House
When you buy a home, financing and the property itself are straightforward. Land, on the other hand, is a blank slate that comes with unique challenges:
Harder financing: Vacant land is riskier for lenders.
Bigger down payments: While typical homebuyers put down 15–16% (~$54K–$63K in 2025), vacant land often requires 20% to 50% upfront.
More research needed: You must verify zoning, access, utilities, and soil conditions.
Step 1: Clarify Your Goals and Budget
Before you begin your search, decide:
Do you want to build a primary residence soon?
Are you buying for investment purposes?
Is this recreational land for farming or outdoor use?
Budget carefully:
All-cash vs financing: Nearly 30% of U.S. real estate transactions in 2024 were all-cash. Cash offers are very strong in land deals.
Hidden costs: Don’t forget surveys, permits, utilities, and site prep.
Step 2: Land Financing Options (Traditional and Alternative)
Traditional Land Loans
Raw Land Loans
Land with no roads, water, or power.
Down payments often 30–50%.
Higher interest rates.
Improved Land Loans
Land with access to utilities and roads.
Easier to finance with 20–30% down.
Government Loans
USDA (for rural land with a home planned).
VA (for veterans who plan to build).These are rare and restrictive for vacant land.
Alternative Financing: Seller Financing
Seller financing (owner financing) means the seller acts as the lender. Instead of getting a bank loan, you pay the seller directly.
Benefits:
Easier to qualify (credit issues aren’t a dealbreaker).
Flexible terms (down payment, interest rate, payment schedule).
Faster closing (no bank approvals).
Risks:
Often higher interest rates.
Balloon payments are common.
You still need an attorney to review contracts.
Stat: Around 1.4 million Americans use seller-financed land contracts, especially in rural areas.
Using Collateral From an Existing Property
If you already own a property, you can leverage its equity:
Home Equity Loan or HELOC: Borrow against your current home.
Cash-Out Refinance: Replace your mortgage with a larger one, and use the cash to buy land.
Cross-Collateralization: Use your current property as collateral for a land loan.
Advantages:
Lower interest rates than raw land loans.
Stronger negotiating position with cash.
Risks:
If you default, your existing property could be at risk.
Step 3: Build Your Team of Experts
Only a small percentage of agents specialize in vacant land. Consider:
Real estate agent experienced with land
Land surveyor (boundaries)
Real estate attorney (title, easements)
Engineers and contractors (soil and buildability checks)
Did you know? About 40% of farmland in the U.S. is leased, not owned—so check for existing agreements on any land you’re buying.
Step 4: Where to Find Land
Online: Zillow, LandWatch, Land and Farm.
Offline: Drive the area, talk to locals, check county tax records. Many land deals never make it online.
Step 5: Due Diligence Before You Buy
Before making an offer:
Confirm zoning laws and allowed uses.
Check legal access (avoid landlocked parcels).
Evaluate utilities (water, sewer, electricity).
Run soil and environmental tests (foundation stability, flood zones, wetlands).
Hire a title company to ensure there are no liens or disputes.
Step 6: Make an Offer & Negotiate
Include contingencies for:
Financing approval
Soil tests
Clear title
Land deals often leave room to negotiate price or seller contributions.
Step 7: After the Purchase
Once you close:
Build your home or project.
Lease the land (farmland, recreational).
Hold it as an investment—farmland values rose about 5% in 2024.
Final Thoughts
Buying land isn’t as simple as buying a house. But with the right research, financing strategy, and expert team, it can be one of the best investments you’ll ever make.
Whether you go with a traditional land loan, seller financing, or leverage your home equity, understanding your options upfront will help you buy smarter and avoid surprises.
