How do you finance land in Texas?

Raw land does not qualify for a conventional home mortgage, so Texas land is financed through four channels: Farm Credit System associations, USDA Farm Service Agency loans, the Texas Veterans Land Board, and portfolio lenders at local banks. FSA Direct Farm Ownership loans run up to $600,000 with terms up to 40 years; FSA-guaranteed loans up to $2,343,000; VLB land loans up to $200,000. Each has its own rules about what the land must be.

Why will an ordinary mortgage lender not finance this?

Because the collateral behaves differently. A house has a dense set of recent comparable sales, a standardized appraisal, and a national secondary market that will buy the loan. A 47-acre tract with a wet-weather creek and a severed mineral estate has none of those things. Texas is also a non-disclosure state — sale prices are not public record — so the appraiser is working from a thinner file than a residential appraiser ever does.

The practical consequences are consistent across land lenders: shorter amortization than a 30-year mortgage or a balloon at some point, more money down, and underwriting that looks hard at what the land is, not just what you earn. Access, water, and whether the tract carries an agricultural valuation are all credit questions on a land deal.

What are the four financing channels, and who is each one for?

We do not quote interest rates on this page and we would be suspicious of a broker who did. Rates move, and FSA publishes its current program rates on its own site. Ask your lender for a written term sheet with the rate, the amortization, the balloon date if there is one, and the prepayment terms on it.

What does the Texas Veterans Land Board actually require?

The VLB land loan program is one of the few genuinely distinctive financing benefits in Texas, and it has specific rules about the dirt.

• The tract must contain at least one acre, excluding any portion beneath a dedicated public roadway or navigable waterway, subject to frequent inundation, or otherwise unusable.
• Minimum five percent down on tracts of one acre or more.
• The maximum loan is $200,000. Under the dual-spouse benefit, two veterans who are spouses and are each individually eligible may apply to purchase the same tract and borrow up to $275,000.
• There is a useful side effect in the subdivision statute: under Local Government Code §232.0015(g), a county may not require a plat where all the lots are sold to veterans through the Veterans' Land Board program and no part of the tract is dedicated to public use. That interacts with subdividing land in Texas.

Eligibility, current terms, and the application itself come from the Texas General Land Office. Confirm the current maximum with the VLB before you write an offer around it.

How does the FSA path work for a first ranch?

FSA lends where commercial credit is not reasonably available, which makes it the most common real path for a first agricultural purchase. The applicant must be a U.S. citizen or permanent resident, must have sufficient education, training, or experience managing a farm, and must show ability to repay. That middle requirement catches people — FSA wants to see that you can run the operation, and a documented history of managing or working an agricultural enterprise matters.

Four structures are worth knowing by name. Direct Farm Ownership loans are made by FSA itself, up to $600,000. Guaranteed loans are made by a commercial lender with an FSA guarantee behind them, up to $2,343,000, and that ceiling is adjusted annually for inflation. Joint financing pairs FSA with another lender, with FSA covering up to 50 percent of the purchase cost. The Down Payment Program is built for beginning farmers and ranchers and requires only a 5 percent down payment, with FSA financing up to 45 percent of the purchase price or the appraised value, whichever is less.

The Down Payment Program also carries a maximum loan amount and a maximum purchase price, and both have been adjusted in recent years. We are not publishing those two figures here, because we could not confirm the current numbers to our own standard. Get them from your FSA farm loan officer or from fsa.usda.gov before you build an offer on them.

What do you do, in order, to get a land loan closed?

1. Pick the channel before you pick the tract. VLB, FSA, and Farm Credit each impose conditions on the land itself. Learning that after you are under contract costs you the option period.
2. Get pre-qualified in writing, with the loan type named. "Approved" means nothing on a land deal without the structure attached.
3. Confirm legal access and utilities early. Lenders will condition on both, and a tract with no recorded access to a public road is often uncollateralizable.
4. Order the survey immediately. Rural surveys take longer than people plan for, and the loan cannot close without one.
5. Pull the title commitment and read Schedule B. Mineral reservations, pipeline easements, and access easements all affect what the lender will lend against. See mineral rights in Texas.
6. Settle the tax question. Confirm whether the tract carries 1-d-1 open-space valuation, whether you intend to keep it, and who bears any rollback. Read rollback taxes in Texas and the Texas ag exemption.
7. Let the appraisal be ordered early, and expect it to take longer than a residential appraisal.
8. Read the term sheet for the balloon and the prepayment terms, not just the payment.

Where does seller financing fit?

More often on rural Texas land than most buyers expect, particularly on family tracts and estate sales where the seller wants to spread the gain. It is worth knowing the distinction between two structures that get called the same thing.

A note secured by a deed of trust transfers the deed at closing and gives the seller a lien. That is the normal, well-understood structure, and it closes at a title company like any other sale.

A contract for deed, or executory contract, holds the deed until the last payment and is heavily regulated in Texas under Property Code Ch. 5, Subchapter D, with disclosure, recording, and conversion obligations on the seller. It is a structure with real traps in both directions. If someone proposes one, get a Texas real estate attorney involved before you sign, not after.

If the plan is a house on the tract, USDA Rural Development's single-family housing programs are a separate path worth asking about, and they have their own income and location eligibility. What the land itself can support is covered in building on rural land in Texas, and the full carrying-cost picture is in what a ranch costs to own.

Frequently asked questions

Can I get a 30-year mortgage on raw land in Texas?

Generally not from a conventional mortgage lender, because raw land is not eligible collateral for standard secondary-market home loan programs. Long terms do exist in the ag channels: FSA offers repayment terms up to 40 years on real estate, and Farm Credit System associations write long amortizations on farm and ranch real estate. Local bank land loans more often carry a shorter term or a balloon.

How much do I need to put down on Texas land?

It depends on the channel. The Texas Veterans Land Board requires a minimum five percent down on tracts of one acre or more, and the FSA Down Payment Program is built around a 5 percent down payment. Conventional bank land loans typically require substantially more down than a home loan. Ask for the specific number in writing as part of your pre-qualification.

What is the maximum FSA farm loan?

Direct Farm Ownership loans run up to $600,000. FSA-guaranteed loans run up to $2,343,000, an amount adjusted annually each fiscal year for inflation. Direct Farm Ownership microloans are capped at $50,000. Repayment terms on real estate run up to 40 years. Confirm current figures with your local FSA office, since program limits change.

How much can a Texas veteran borrow through the VLB?

Up to $200,000 to purchase land, with a minimum five percent down and a tract of at least one net acre. Two veterans who are spouses, each individually eligible for the program, may apply together to purchase the same tract and borrow up to $275,000. The Texas General Land Office administers the program and publishes current terms.

Does an ag exemption help me get a loan?

Indirectly, and it matters more than buyers expect. A 1-d-1 open-space valuation lowers the annual property tax carry, which improves the debt service coverage a lender is underwriting. It also signals that the land has a documented agricultural history. Remember that the valuation does not transfer automatically at closing — the new owner must file a new application with the county appraisal district between January 1 and April 30.

Will a lender finance land with no road access?

Usually not. A tract without recorded, deeded access to a public road, or without a recorded easement, is difficult to collateralize because it is difficult to resell. This is one of the first things to verify, before the survey and before the appraisal, and it is the single most common reason a land loan dies late.

Can I finance the land and the house together?

Sometimes, through a construction-to-permanent structure, but the rules are lender-specific and the land has to already be buildable — access, water, power, and an approved on-site sewage facility plan. Many buyers finance the land first and build later, which is cleaner but means two closings. Ask the question before you write the offer, not after.

Sources and method

Sources and method

USDA Farm Service Agency, Farm Ownership Loans program page, including Direct, Guaranteed, Joint Financing, and Down Payment Program terms · USDA Farm Service Agency current loan interest rates page · Texas General Land Office, Veterans Land Board Veterans Land Loan program · Texas Local Government Code §232.0015(g) · Texas Property Code Ch. 5, Subchapter D (executory contracts for conveyance) · Texas Tax Code §23.51 et seq. and §23.55 · Figures verified August 2026.

Loan program maximums, eligibility rules, and terms change, and FSA's guaranteed loan ceiling is adjusted annually for inflation. We do not publish interest rates. The FSA Down Payment Program's current maximum loan amount and maximum purchase price are not published on this page because we could not confirm the current figures to our own standard — get them from fsa.usda.gov or your FSA farm loan officer. Confirm all current terms directly with the lender or agency before you rely on anything here. This is general information, not tax, legal, or financial advice.

Tell us the tract and the timeline. We will tell you which financing channel actually fits it, what the lender is going to ask about access and water before they will lend, and what has to happen in the first ten days. We have watched land deals die at the appraisal for reasons that were visible on day one. Start at Texas Land & Ranch.

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Damon Williamson, Broker-Owner · Licensed Real Estate Agent, State of Texas.

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