How to Buy Land

Buying land is one of the most meaningful purchases most people will ever make — whether you are adding acres to an existing farm, buying your first piece of ground, or securing a place to build and raise a family. It is also a purchase that surprises many first-time buyers with its complexity.

This guide walks through the process step by step, from deciding what you want and where to look, all the way through closing and taking ownership. It is written for buyers of agricultural and rural land — farm ground, ranchland, timberland, small acreages, and country homesteads — where the process and the financing differ meaningfully from buying a house in a subdivision.

Getting an Ag Loan for Your Land Purchase

Agricultural land financing is a specialty. The lenders, the loan structures, and what lenders require are all different from a standard home mortgage. Understanding that going in will save you time and frustration — and help you show up to a lender conversation looking prepared.

Step 1: Define What You Want — and What It Will Cost

Before you look at a single listing, get specific about what you actually need.

• Size. How many acres do you need for your intended use? Farming row crops, running cattle, keeping horses, and building a homestead all require different amounts of land.
• Use. What will you do with it? Cropland, pasture, timberland, and build-ready lots are valued and financed differently. Your intended use also shapes which lenders and programs are available to you.
• Location. How close does it need to be to your home, your operation, or a town? Distance matters for day-to-day management, especially for livestock.
• Budget. Know your number before you fall in love with a property. Include the purchase price, closing costs (typically 2–5% of the purchase price), any immediate improvements, and your first year of carrying costs — taxes, insurance, utilities.

The USDA reported that U.S. farm real estate averaged $4,170 per acre in 2024, with cropland at $5,570 per acre and pasture at $1,830 per acre nationally. Regional variation is enormous — prime Iowa cropland can exceed $15,000 per acre, while timberland in the Southeast may trade well below the national average.

Step 2: Get Pre-Qualified Before You Search

Knowing what you can borrow — and on what terms — before you start looking has two important advantages: you shop with confidence, and sellers take you seriously.

Agricultural land loans are underwritten more strictly than home mortgages. Lenders look at your credit, income, and debt, and they look at the land itself — its access, its title, its intended use, and its appraisal. Understanding land loan requirements before you apply helps you walk into the conversation prepared.

Start your pre-qualification here — it takes a few minutes and does not affect your credit.

Step 3: Find the Right Parcel

Rural land listings appear across many platforms. A few worth knowing:

• LandWatch, Lands of America, and Land And Farm are the largest national marketplaces for rural land.
• Local real estate agents who specialize in farms and land — sometimes called land brokers — often know about properties before they are listed publicly.
• Auctions are common for farm ground, particularly in the Midwest. Land auctions can move quickly, so financing pre-approval is important if you plan to bid.
• County records and direct outreach — some buyers identify land they want and simply contact the owner. This is more work but can lead to off-market deals.

When you find a parcel that interests you, resist the urge to fall in love before you have done basic due diligence. A wrong assumption about access, water, or zoning can be an expensive mistake.

Step 4: Do Your Due Diligence

This step is where land purchases succeed or fall apart. Every parcel deserves careful scrutiny before you make an offer — or at minimum, before you waive your inspection contingency.

Access. How do you get to the property? By a public road, or across someone else's land? Confirm that any access not on a public road is covered by a recorded easement — a legal right that runs with the land, not just a neighbor's verbal agreement. Lenders will not finance land without confirmed, documented access.

Title. A title search confirms who owns the land and surfaces any liens, judgments, encroachments, or other interests attached to it. Always purchase title insurance.

Survey. A current survey confirms the boundaries and the true acreage. It can also reveal encroachments or gaps that a title search misses.

Water. Does the property have water? Is there a well, a pond, or creek access? Is there a legal water right? In the West, water rights are often separate from the land itself and must be confirmed.

Zoning and permitted use. Confirm that the parcel is zoned for what you intend to do with it. Agriculture, residential, and conservation zoning all have different use restrictions.

Utilities. If you plan to build, can you get power, phone, and internet? Can a well and septic system be installed, and is the soil suitable?

Flood zones and wetlands. FEMA flood maps and the USDA's Web Soil Survey can both reveal flood or wetland conditions that affect what you can build and how you can use the land.

Environmental concerns. Old fuel tanks, chemical storage, or former industrial use can all create liability. If there is any question, an environmental assessment may be warranted.

For buyers considering land and construction together, our guide on land and construction loans covers how those two financing steps work together.

Step 5: Make an Offer and Sign a Purchase Contract

Once you are comfortable with what you've found, you make an offer. Rural land purchase contracts are similar in structure to residential contracts but often include contingencies specific to land:

• Financing contingency — your obligation to close depends on your loan being approved.
• Inspection or due diligence contingency — you have a period to conduct your own investigation.
• Survey contingency — the sale is contingent on a current survey confirming the acreage and boundaries.
• Access contingency — particularly important if access is not by public road.
• Zoning contingency — if your intended use depends on a specific zoning classification.

A real estate attorney experienced with rural land transactions is valuable here, especially if the property has complex title, water rights, or access questions.

Step 6: Secure Your Financing

Once you have a signed purchase contract, your formal loan application begins in earnest. Be ready to provide:

• Tax returns for the past two to three years (personal and business if applicable)
• A current balance sheet — your assets and liabilities
• Income statements or farm financial statements
• The purchase contract
• Any existing leases or farm operating plans
• Entity documents if buying through an LLC, partnership, or trust

Your lender will order an appraisal. Agricultural land appraisals are a specialty — they use rural comparable sales and account for soil quality, water, improvements, and land use in ways that standard residential appraisals do not.

A few lender types to consider for agricultural land:

• Farm Credit System lenders — the nationwide network created by Congress in 1916, now holding $544.4 billion in assets and serving more than 40% of U.S. farm debt. Specialists in rural land.
• USDA Farm Service Agency — for farmers who may not qualify for full commercial credit; FSA Direct Farm Ownership loans go up to $600,000, guaranteed loans can exceed $2.3 million.
• Community and agricultural banks — local knowledge matters; a rural bank often knows the land market better than a city lender.
• Farmer Mac–backed loans — long, fixed-rate terms for qualified borrowers and properties.

If you are buying a small farm, homestead, or hobby farm, the lender selection matters as much as the rate — an agricultural lender will value a barn and outbuildings that a conventional lender would ignore.

Step 7: Close and Take Ownership

The closing on rural land is similar to a home closing: you sign documents, pay closing costs, and the deed is recorded in your name (or the name of your entity). A few things specific to land closings:

• Proration of property taxes — you and the seller will split the year's taxes based on the closing date.
• Transfer of any leases — if the land is under a farm lease or hunting lease, those agreements transfer to you as the new owner.
• Recording the deed and easements — confirm that the deed and any easement documents are properly recorded with the county.
• Title insurance — your owner's policy should be issued at closing.

Once closed, you are the owner of record. Keep your closing documents, your title policy, and your survey in a safe place.

Common Mistakes First-Time Land Buyers Make

• Skipping the access check. Assuming you can get to the land is one of the most common and costly mistakes.
• Making an offer before checking zoning. Find out what's allowed before you fall in love.
• Underestimating carrying costs. Property taxes, insurance, maintenance, and any loan payment add up — know your full annual cost before you buy.
• Not getting pre-qualified first. A land loan is not automatic; understanding what you can borrow before you search saves wasted time.
• Using the wrong lender. A conventional mortgage lender may undervalue the property or decline entirely. Work with someone who knows rural land.
• Ignoring the water situation. No water — or no legal water right — can make land far less valuable or even unusable for your purposes.

Frequently Asked Questions About Buying Land

How much land can I buy with my budget? It depends on location, land type, and quality. National averages run roughly $1,800–$5,600 per acre for agricultural land, but regional prices vary enormously — from under $1,000 per acre for remote timberland to well over $15,000 per acre for prime Midwest cropland. Know your target region's market before you set expectations.

Do I need a down payment to buy land? Generally, yes. Agricultural land loans typically require a larger down payment than a home mortgage — often 20–35%, depending on the lender and the land type. FSA Beginning Farmer programs offer lower down payment options, sometimes as little as 5%.

Can I get a loan for raw, undeveloped land? Yes, but it is harder than financing improved or build-ready land. Raw land carries more risk for lenders — no access, no utilities, no structure — so expect a larger down payment and fewer lender options. Specialized agricultural lenders and Farm Credit System lenders are your best starting point.

Do I need a real estate agent to buy land? Not legally, but a land broker or agent who specializes in rural property adds real value — they know the local market, know what comparable parcels sold for, and can help identify off-market opportunities. Their commission is typically paid by the seller.

How long does buying land take? Expect 45–90 days from signed contract to closing, though it can be shorter for cash sales or longer if there are title, survey, or access complications. Agricultural appraisals can take 3–6 weeks. Factor this into any timing commitments.

What is earnest money on a land purchase? Earnest money is a deposit you put down when you sign the purchase contract, typically 1–5% of the purchase price. It signals to the seller that you are serious. If you proceed to closing, it applies toward your down payment or closing costs. If you back out without a valid contingency, you may forfeit it.

Is buying land a good investment? Rural land has historically appreciated over time — the USDA reports U.S. farm real estate values have risen steadily for decades. But like any investment, it depends on location, intended use, what you pay, and what you do with it. Land is generally illiquid; it takes time to sell.

What taxes will I pay on land I own? At minimum, annual property taxes — rates vary by county and state. If you sell at a profit, federal and state capital gains taxes apply. Some agricultural and open-space land qualifies for favorable tax treatment under state programs — worth asking about locally.

Sources

1. USDA National Agricultural Statistics Service — Land Values 2024 Summary: U.S. farm real estate, cropland, and pasture values per acre. https://www.nass.usda.gov/Publications/Highlights/2024/2024LandValuesCashRents.pdf
2. USDA Farm Service Agency — Farm Loan Programs (FSA Direct and Guaranteed loan limits). https://www.fsa.usda.gov/resources/farm-loan-programs
3. Farm Credit System — 2024 year-end financial results (total assets, customers served, share of farm debt). https://www.farmcrediteast.com/en/about/NewsRoom/press-releases/250223FCSQ42024Financials
4. Farmer Mac — 2024 annual results ($29.5 billion outstanding business volume). https://www.farmermac.com/investors/press-releases/
5. FEMA National Flood Hazard Layer — flood zone mapping. https://msc.fema.gov/
6. USDA Web Soil Survey — soils and land capability data. https://websoilsurvey.nrcs.usda.gov/

AgLoans.com is a marketing platform and lead generator, not a bank or lender. All loans are originated by our network of partner lenders. Submitting information does not guarantee approval. Loan terms, rates, and availability vary by lender and borrower qualifications. Nothing in this article constitutes financial, legal, or tax advice. Consult qualified professionals for guidance specific to your situation.