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Apr 17, 2024

Land Loans in Texas Explained

by Legacy Ag Credit

The allure of sprawling Texas landscapes, with its farmlands and serene rural settings, calls many to pursue farm life. Land loans in Texas serve as a bridge for those who dream of rural living, whether it's managing a farm, breeding horses, or simply enjoying nature. This post will take a deep dive into land loans, the different types of loans available, key terms borrowers should know, tips to improve credit scores, budgeting tools, and so much more. Get ready! You're dreams of owning a bit of Texas are this much closer to reality.

How do Land Loans Work?

Texas land loans offer a great deal of flexibility, making them an ideal choice for aspiring landowners not immediately prepared to construct. These loans cater to the unique pace and planning needs of future builders, providing a manageable pathway to land ownership. Understanding the workings of a land loan is important for all borrowers. Here's a brief look at the necessary steps to the land loan application process:

  1. Assess Your Needs
  2. Begin Land Search
  3. Complete Loan Application
  4. Property Appraisal
  5. Approval and Closing

Explore the Different Farm Credit Options and Interest Rates

Legacy Ag Credit offers a diverse set of loan products, each can be tailored to the unique needs of residents of Texas who are passionate about rural and agricultural living. Our team has a keen understanding of land value, and can provide competitive farm credit solutions designed to bring your vision of land ownership to reality. Let's look at loan options available to you through Legacy Ag Credit.

uderstanding different types of land loans

Rural Land Loans

Rural land loans are specifically tailored for individuals looking to purchase undeveloped land in the countryside. Requirements often include a detailed plan for the land use, whether it's for farming, residential, or conservation purposes. Borrowers should be prepared with financial statements to prove their ability to repay the loan. Discover land and other types of loan products below and find more loan options at Legacy Ag Credit.

Land Improvement Loans

Land improvement loans cater to landowners aiming to enhance the value and utility of their property. These loans can cover a wide range of improvements, from irrigation systems and road construction to the addition of structures or facilities essential for agricultural operations. Applicants need to present a clear improvement plan along with estimates of the project costs.

Recreational Land Loans

Designed for those who seek land for leisure activities such as hunting, fishing, or camping, recreational land loans provide the financial support to purchase wilderness areas or other types of recreational land. Requirements might include a down payment and a comprehensive plan detailing the intended recreational use.

Farm Operating Loans

Farm operating loans are essential for farmers needing to cover the day-to-day expenses of running their agricultural operations. These can include costs related to crop production, livestock care, equipment maintenance, and other operational needs. Applicants are usually required to demonstrate a history of farming experience and provide detailed financial records.

Livestock Loans

Livestock loans support farmers in purchasing, raising, and breeding livestock. Whether it's for expanding a herd of cattle, feeding and breeding, or other operational needs, livestock loans are helpful for stability and growth.

Poultry Farm Loans

Legacy Ag Credit can help obtain flexible financing for poultry farming. Applicants can rely on this type of loans for a range of short-term operating needs. Funds can help with needs such as the purchase of an existing farm or the construction of new housing, retrofitting existing poultry facilities, or buying equipment.

poultry farm loans

Farm Equipment Loans

With the high costs associated with agricultural machinery, farm equipment loans are crucial for farmers needing to purchase, upgrade, or repair tractors, harvesters, and other essential equipment. These loans are structured to make it easier for farmers to access the latest technology and maintain efficient operations.

Barndominium Loans

Barndominiums are a novel and intriguing blend of barn and condominium; they represent a fresh take on home design. Barndominium loans from Legacy Ag Credit are tailored to cover the purchase of the land, the barndominium kit (including materials and roof), and the construction costs. We encourage you to explore more about barndominiums, including the building process and their benefits.

Application Process Simplified

Applying for any type of land loans requires preparation, an eyes-wide open understanding of your financial situation, and an awareness what to expect in the process. Here's a streamlined view of the steps you may take:

Financial Preparation

Begin with a thorough assessment of your finances. Understanding your current financial health is crucial. If you're not in an ideal place financially there are ways to get credit scores up.


Next, craft a budget that includes your down payment, expected loan rates, and additional costs. Try out our land loan calculator to get your budget on track.

Seek Pre-approval

Approach lenders for pre-approval to understand how much you can afford. This step enhances your buying credibility.

Loan Application

Submit a comprehensive application with all required documents.

Property Appraisal

A crucial step where the land you intend to purchase is evaluated.

Final Approval and Closing

Upon approval, you'll proceed to closing, finalizing the loan terms, and taking a step closer to land ownership.

calculating how to qualify for a farm credit

How to Qualify for a Land Loan in Texas?

Securing a land loan in Texas involves a bit of upfront preparation. To position yourself as an ideal candidate, start by maximizing your credit profile. A favorable credit score not only improves your eligibility but could earn you more favorable loan terms. Consider consulting with a Legacy Ag Credit loan officer to identify strategies for improvement, such as paying down existing debts and avoiding new credit inquiries in the months leading up to your loan application.

How to Calculate Loan Rates?

Understanding loan rates, which can vary based on market conditions and borrower eligibility, is fundamental in planning your land purchase. Legacy Ag Credit is known for offering competitive rates and terms, tailored to support your ambitions. For a deeper dive into calculating your potential land loan rates, visit Legacy Ag Credit's insightful article on land loan calculation.

Plan Ahead for Financing Recreational Property

Venturing into recreational property, like establishing a horse stable, necessitates meticulous planning. Drafting a detailed business plan that outlines your vision, operational strategy, and financial forecasts is a critical first step. This document not only serves as a roadmap for your business but is also essential when applying for financing, showcasing the viability and thoughtfulness of your project.

Land Loan Key Terms

Understanding the language of land loans can help demystify the application process and gives borrowers the power to make informed decisions. Here's a few terms loan applicants will hear throughout the process.

  • Term Options: The duration over which you'll repay the loan.
  • Rate Lock: An agreement to freeze the interest rate for a certain period, protecting against rate hikes.
  • Loan-to-Value (LTV): The portion of the property's value that the lender is willing to finance.
  • No Building Requirements: Flexibility allowing land to remain undeveloped.
  • Loan Amount: The total sum borrowed.
  • Interest Rates: The cost of borrowing, expressed as a percentage of the loan.
  • Repayment: The process of paying back the borrowed amount over time.
  • Eligibility Requirements: Criteria that borrowers must meet to qualify for a loan.

Reach Out to an Expert in Texas Land Loans

Embarking on the journey of land ownership is a significant step, one best navigated with the support of a knowledgeable loan officer. Consulting a professional with expertise in Texas land loans and one who is familiar with the local landscape can provide you with tailored advice and insights for your situation. Legacy Ag Credit's team of experts is well-equipped to guide you through this process, ensuring you make decisions that align with your dreams and financial goals. Find a lending expert near you by visiting Legacy Ag Credit's website.

make your dream of rural living a reality with ag credit loans


Q: How do land loans work in Texas?

A: Land loans in Texas are designed for purchasing undeveloped land. Borrowers typically need to provide a larger down payment than traditional mortgages, with loan terms and interest rates depending on factors like the land's location and intended use. The process involves financial preparation, property selection, application submission, and, upon approval, closing.

Q: Is Texas a welcoming state for international property buyers?

A: Yes, people from all over the world can buy property in Texas without significant restrictions. International buyers must comply with U.S. law and may require an Individual Taxpayer Identification Number (ITIN) if they do not have a Social Security Number. It's advisable to consult with a real estate attorney to work through the specifics.

Q: How to buy hunting land in Texas, and what are the key steps?

A: Buying hunting land in Texas is a multi-step process, similar to obtaining a mortgage. Here is a brief overview of what to expect when buying hunting land in Texas.

  1. Define your needs and determine the size, location, and types of game you desire.
  2. Establish a budget and know how much you can afford, including land costs and any improvements.
  3. Shop around and use local listings and land brokers to find available properties.
  4. Evaluate the land you are considering. Think about factors like access, habitat, and water sources.
  5. Secure financing through a land loan.
  6. Negotiate the terms and make an offer.
  7. Finalize the sale through a legal closing process.

Q: How to finance land?

A: Land can be financed through a land loan offered by banks, credit unions, and specialized lenders like Legacy Ag Credit. These types of loans often require a down payment and come with terms and interest rates that reflect the perceived risk of the loan.

Q: Is it recommended to borrow money to buy a piece of land?

A: Borrowing money to buy land can be an excellent investment, especially if the land appreciates in value or generates income. However, it's important to carefully consider the loan's terms, your ability to meet the payments and the intended use of the land.

Q: How to get a loan for land?

A: The process of getting a land loan is a multi-step process. Your loan officer can walk you through all the steps. Here is a quick overview of how to get a loan.

  1. Research lenders and find the one with the most favorable terms and offers land loans in your area.
  2. Prepare your finances beforehand. Ensure your credit score and financial documents are in order. If your credit score is low, take measures to increase it before applying.
  3. Have a good idea of how much you can afford to borrow and repay. Use Legacy Ag Credit's budgeting tools to get an estimate. 
  4. Submit the application to the lender, providing all required documentation.
  5. The lender will require an appraisal to determine the land's value.
  6. If everything is approved, the loan will be finalized, and the purchase process will be started.

Q: How long are land loans?

A: Land loans usually have shorter terms than residential mortgages, and many lenders will cap the terms at 15 years. At Legacy Ag Credit, we can typically finance land for up to 20 years. The term will vary based on the lender and the borrower's specific situation.

Q: How are land loans structured?

A: Land loans are usually structured with a higher interest rate and larger down payment requirement than traditional mortgages. The repayment term is often shorter, but most of the loans are fixed for the life of the loan.

Q: How hard is it to get a loan for land?

A: Obtaining a land loan can be more challenging than getting a mortgage for a home, as lenders consider land loans riskier. Success will depend on the borrower's creditworthiness, the down payment, the property's location and type, and the lender's policies.

Q: How do you apply for a land loan?

A: When applying for a land loan, the process will be much smoother the more prepared you are. Here are the steps for applying for a loan. Your lender may have additional steps and will keep you posted throughout the process.

  1. Prepare financial statements, proof of income. As part of the preparation, monitor your credit history to ensure a satisfactory credit rating prior to application.
  2. Choose a lender like Legacy Ag Credit that is experienced in land loans.
  3. Complete the lender's application form and submit it along with all the required documentation.
  4. The lender will arrange for an appraisal to assess the land's value.
  5. The lender will review your application and make a decision. If approved, you will proceed to closing.