Most conventional lenders won't touch raw land at all. Banks that do typically require 20–30% down, shorter loan terms (10–15 years), and higher interest rates. The reason is simple: if you default on a home, the lender has a livable asset they can sell. If you default on raw land, they have a field.
The good news: there are specialist lenders built specifically for land — and knowing which one fits your situation makes all the difference.
Before you fall in love with a piece of land, answer these four questions. They affect your total cost, your financing options, and how livable the property actually is.
Municipal water is the easiest and most lender-friendly. A rural water district co-op is common in South Texas and usually requires a connection fee plus monthly minimums. A private well is your responsibility — and your expense.
If a power line runs along the road in front of the property, connection costs are manageable. If the nearest line is a quarter-mile away, you're looking at a significant infrastructure cost — or going solar/generator.
Most rural properties will require a septic system. Lenders that require improvements before closing may require a working septic. A new conventional septic system in South Texas runs $10,000–$20,000. An aerobic system (required in some counties near water) runs $15,000–$30,000.
The property needs legal access — either direct frontage on a public road, or a recorded easement. A caliche or dirt road is fine for most land loans but adds context on usability in wet weather.
A manufactured home on a permanent foundation (HUD-certified, title retired, affixed to the land) is treated as real property and can be financed as part of the land. A mobile home on blocks or piers is personal property — and lenders treat it very differently, often refusing to count it as collateral.
Barns, fencing, water troughs, and working improvements generally add value and don't hurt financing. A habitable structure (even a small cabin) may trigger lenders to require a home appraisal alongside the land appraisal — which can be a good thing if it adds value.
If you want to buy land AND build a home in one transaction, a One-Time Close (OTC) construction loan lets you do it. One closing, one set of costs, rate locked before construction begins. Available as FHA (3.5% down), VA (zero down for veterans), or conventional.
| Lender | Down | Term | Best For | Watch Out |
|---|---|---|---|---|
| Capital Farm Credit | 15% | 15 yr | Agricultural, recreational, hunting/camping land | No mobile home mention. Requires rural use intent. |
| Texas Farm Credit | 15–20% | 15–25 yr | Recreational, agricultural, rural residential | Similar restrictions to Capital Farm Credit on structures. |
| Texas VLB | 5% | 30 yr | Texas veterans, 5+ acres, below-market rate | Texas residency required. Must have served in US military. |
| Conventional / Bank | 20–30% | 10–15 yr | Improved lots with utilities, near urban areas | Won't finance raw rural land in most cases. Higher rates. |
| One-Time Close (FHA/VA) | 0–3.5% | 30 yr | Buy land + build home in one transaction | Must have an approved builder and construction plan upfront. |
These are general estimates for planning purposes. Always get contractor quotes before closing.
| Item | Low Estimate | High Estimate | Notes |
|---|---|---|---|
| Water well (new) | $8,000 | $25,000+ | Depends on depth. Get a well report on existing wells. |
| Septic system (conventional) | $10,000 | $20,000 | Aerobic system (required in some areas) runs higher. |
| Aerobic septic system | $15,000 | $30,000 | Required near creeks, rivers, or certain county regs. |
| Electric co-op extension | $3,000 | $15,000+ | $8–$12/ft from nearest transformer. Call co-op first. |
| Solar + battery backup | $15,000 | $40,000 | Alternative to electric extension for remote properties. |
| Caliche road (per mile) | $8,000 | $25,000 | Highly variable based on terrain and length. |
| Fence (per linear foot) | $3 | $8+ | Barbed wire vs. high fence. Corner posts add cost. |
| Survey (new boundary) | $1,500 | $5,000+ | Always get a survey. T-47 affidavit is not a substitute. |
I work with buyers across Bexar, Medina, Atascosa, McMullen, and surrounding counties. Whether you're looking for a hunting getaway, a place to build, or land to park a home on — I can help you navigate the financing, the due diligence, and find the right property.
Lender connections: Capital Farm Credit, Texas Farm Credit, Texas VLB, and more.