Finding the right loan for your residential property isn’t always straightforward. Depending on factors like the size of your land or what you want to do with your home, a typical residential loan might not work for you. In these cases, turning to rural property lenders will help you find the financing you need. Learn more about the differences between residential and rural property loans and find the right lending option for your land with this quick guide.
Similarities Between Home and Land Loans
While it’s important to know how residential and rural property loans differ, it’s also important to understand what they have in common. The application process for both types of loans is similar—both processes include a credit check, a property survey or appraisal, and so on. With both types of loans, you need to consider the down payment and interest rates to make sure you can afford the loan.
Most importantly, it’s essential to work with a trusted lender for each type of loan. Choosing someone who specializes in rural property loans or residential loans gives you access to the best knowledge and service possible for your financing process.
Down Payment Differences
When it comes to reviewing loan options, cost is one of the biggest factors to keep in mind. Rural property loans tend to have larger down payments than home loans. Down payments for rural land start at 25 percent and are often higher. Down payments for residential loans vary greatly; they currently average around 20 percent but can be as low as 3.5 percent depending on your circumstances.
Land Loans Are More Flexible
The biggest difference between residential and rural property loans is the flexibility in what you can do with them. As the name implies, home loans are limited to just that—a home. Many residential lenders won’t offer loans for any property over one acre, even if there is a home on it. But with rural land loans, you have more freedom. You can purchase a large property with a home on it, build your own home on your property, or start any number of agricultural businesses, including farming, ranching, maintaining a hunting or recreational property, and much more.
Rural land lenders make it easier for property owners to do what they want with their land. If a rural property loan sounds like the right financing option for you, Farm Plus Financial is here to help. Learn more about our flexible loan options, speak to our lending experts, or start your application when you visit us online today.