How much money do I have to put down when buying land?
Another question that comes up often from land buyers is, “How much money do I have to put down when buying land?” Unlike the last question about well depth, this one is relatively easy to answer.
First, unless a seller wants a certain amount of earnest money (the deposit you pay to the title company when you go under contract), the seller does not usually care how much money you have to put down.
Obviously, if you are offering cash for the land, you need 100% of the purchase price in hand in order to close on your purchase.
If you are getting a land mortgage, however, you will need to have a certain percentage of the purchase price available in cash for a down payment. The actual amount depends on which financial institution you are using, what condition the property is in and how you might be using the land.
For example, if you are purchasing land that has no structures on it, but does have electricity, water and septic already in place, you would need a lower down payment than if you were to purchase raw land with no improvements at all.
If you are purchasing land and will be building a home right away, you might want to look at a construction loan which typically requires a lower down payment than a land-only loan.
The bottom line is the cash you need in order to purchase land can range from 20-40% or more. If you are considering buying a parcel of land, the first thing you should do is to speak to a financial institution that provides land mortgages to see what they would require.
If you are purchasing land in the Kalispell area, you could try Whitefish Credit Union, US Bank, or your community bank or credit union. Also, if you were just surprised by the 20-40% listed above, please note you could look into other methods for obtaining the cash needed. For example, perhaps you could consider getting a home equity line of credit, obtaining money through a gift, or find some other method of financing the property. But the first step should be to contact your preferred financial institution and talk your specific situation through with them.
If you need any more information about “How much money do I have to put down when buying land,” call me or email me! 406-270-3667 or kat@thehousekat.com.