Land Loans in Texas: Who Lends on Rural Land, and What They Ask For

Land loans in Texas are easy to find and hard to get on good terms. Plenty of lenders will finance rural land. What changes is the price of the money. A raw tract with no road, no power and no comparable sales can need half the purchase price as a down payment at a bank. A Texas veteran buying one acre or more can put down 5 percent through the state’s own land program.

The reason is simple. A house loan can be sold to Fannie Mae or Freddie Mac. A loan on bare land usually cannot, so the lender keeps it and prices the risk itself. That is why land loans are shorter, cost more and ask for more cash up front. It is also why the lender you pick matters more here than on any house.

This guide goes through who lends on land in Texas, what each one asks for, and what to do when the bank says no. For what the land itself is worth in each of the 254 counties, start with our guide to buying land in Texas.

Land loans in Texas: the numbers in short

• Bank down payments. 35 to 50 percent on raw land, 25 to 35 percent on unimproved lots and 20 to 25 percent on improved lots, according to Herring Bank, a Texas lender.
• Farm Credit. Capital Farm Credit says it typically finances 80 percent of value, and up to 85 percent, with no mortgage insurance.
• Veterans Land Board. Up to $200,000 on at least 1 acre in Texas, 5 percent down, 30 years fixed, at 7.25 percent in September 2026.
• USDA Farm Service Agency. Direct farm ownership loans up to $600,000 at 6.000 percent in September 2026, and a 5 percent down payment program for beginning farmers.
• Rates. Land loans typically run 1 to 3 points above comparable home mortgage rates.
• Owner financing. Legal, and regulated. A contract for deed on a future home must be recorded within 30 days, and after 40 percent paid the seller cannot simply take the land back.

Why a land loan in Texas is not a mortgage

Most home loans in the United States are written to the standards of Fannie Mae and Freddie Mac, so the lender can sell them. Those standards are built around a house someone lives in. Vacant land does not fit them, so a land loan stays on the lender’s own books. The lender carries the risk for the life of the loan, and it charges for that.

Three things follow. The term is shorter, often 10 to 20 years instead of 30. The rate is higher, typically 1 to 3 points above a comparable home loan. And the down payment depends on how close the land is to being a homesite. The more a lender would struggle to sell the land after a default, the more of your money it wants in front.

Farm Credit: the lender built for rural Texas

The Farm Credit System is a network of borrower-owned lending cooperatives created by Congress to finance agriculture and rural America. In Texas it is the most common lender for land. Several associations cover the state, including Capital Farm Credit and Texas Farm Credit, and they lend on farms and ranches, hunting tracts and rural homesites alike.

Capital Farm Credit says it typically finances 80 percent of a property’s value, sometimes up to 85 percent, with fixed and adjustable rates and no private mortgage insurance. Because the associations are cooperatives, borrowers can also get back part of their interest as patronage. Capital Farm Credit reports $2.9 billion in combined cash returns and allocated equities to members since 2006. Patronage is not guaranteed and varies by year, so treat it as a bonus, not as part of the rate you compare.

Farm Credit loan officers know rural land. They understand wells, septic, easements and agricultural valuation, and their appraisers work with rural comparable sales. For a first land purchase in Texas, it is usually the first call to make.

The Texas Veterans Land Board

Texas is one of very few states that runs its own land loan program for veterans. The Veterans Land Board, part of the General Land Office, lends up to $200,000 for land, or $275,000 when two eligible veteran spouses buy together. The tract must be at least 1 acre and wholly within Texas. The minimum down payment is 5 percent, on a 30-year fixed-rate loan. The rate was 7.25 percent when we checked in September 2026.

To qualify you must be a legal resident of Texas and meet one of the program’s service tests, such as active duty service or membership in the Texas National Guard. The loan is subject to credit approval, there is a $325 appraisal and contract service fee, and there is no prepayment penalty. The Board also runs separate home and home improvement loans that a veteran can use later, when it is time to build.

Can you use a VA loan to buy land in Texas?

Not bare land on its own. A federal VA home loan finances a home, and it can include the lot the home sits on, but it does not finance vacant land you plan to build on someday. That gap is exactly what the Veterans Land Board fills in Texas.

Local banks and credit unions

A community bank or credit union in the county where you are buying is the other common source. These lenders keep land loans in their own portfolio, so terms vary widely from one to the next. Expect 10 to 20 years of amortization, and sometimes a balloon payment after 5 or 10 years that you must refinance or pay off.

The advantage of a local lender is local knowledge. A bank in the county seat knows which roads flood, which subdivisions never got water, and what land actually sells for. The disadvantage is size: a small bank may not lend far outside its county, and may want you to open accounts there. Ask two or three, and ask each one the same questions about term, rate, balloon and down payment.

USDA programs: what they do and do not cover

The USDA has two different land-related lenders, and people mix them up. The Farm Service Agency lends to people who will farm or ranch. Its direct farm ownership loans go up to $600,000, at 6.000 percent in September 2026, with terms up to 40 years. Its down payment program helps beginning farmers and ranchers buy with 5 percent down, with the agency financing up to 45 percent of the price at 2.000 percent. You need farming experience and a real operation, and a weekend homestead does not count.

USDA Rural Development is the home loan side. Its programs finance a house in an eligible rural area, and the land under it, for households within the income limits. They are not a way to buy vacant land to hold. If you plan to build, ask a lender about a construction-to-permanent loan that covers the lot and the house together.

Owner financing and contracts for deed in Texas

When no lender will touch a tract, the seller often will. Owner-financed land is common in Texas, and it is legal. Seller-financed deals often run a 5 to 10 year balloon on a 20 to 30 year schedule. The safer form is a deed with a note and a deed of trust, where you own the land from closing and the seller holds a lien, just like a bank would.

The riskier form is a contract for deed, which Texas law calls an executory contract. You make payments, but the seller keeps title until you finish paying. Texas regulates these closely when the land is, or will be, the buyer’s residence, under Property Code Chapter 5, Subchapter D. Three protections matter most:

• Recording. The seller must record the contract with the county within 30 days of signing (section 5.076).
• Annual statement. Every January the seller must send an accounting of what you have paid and what you still owe (section 5.077).
• Equity protection. Once you have paid 40 percent of the price, or 48 monthly payments, the seller can no longer simply cancel and keep the land. A default must go through a sale by trustee (section 5.066).

Even with those rules, insist on a title search and a title policy before you pay anything, and have a Texas real estate attorney read the contract. A seller who still owes a mortgage on the land can lose it to their own lender while you are paying them.

What a Texas land lender will check

A land loan gets underwritten on the land as much as on you. Have these ready, or know the answers, before you apply:

1. A survey. Most lenders and title companies want a current one, and on rural land the boundaries are often older than the fences.
2. Legal access. A recorded easement or frontage on a public road. Texas has no statute that forces a road across a neighbor, and a lender will not lend on a landlocked tract.
3. An appraisal with real comparables. The fewer similar sales nearby, the more cautious the value and the bigger the down payment.
4. Flood zone. A building in a mapped flood zone will need flood insurance for most loans, and a homesite may need a county floodplain permit.
5. Minerals and the agricultural valuation. Who owns the minerals, and whether the land carries an ag valuation that you will keep, or lose with a rollback.

If the land has an agricultural valuation, read our guide to the agricultural exemption in Texas before you close. Keeping it can lower the tax the lender will count against you every year.

Keep reading

• Buying land in Texas – what an acre is worth in all 254 counties, and the checks only Texas asks of you.
• The agricultural exemption in Texas – how the valuation works, what it saves, and how to keep it when you buy.
• What it really costs to build a barndominium – the build most Texas land buyers are pricing, with the land included.
• The Rural Property Field Guide – our free walkthrough of the checks, in the order to run them.

Before you buy, the important part

American Home Opportunities is a publisher. We are not a lender, mortgage broker, real estate broker, agent, attorney or financial advisor, we do not arrange loans, and nothing here is legal, tax or financial advice. No lender paid to be mentioned on this page.

Loan terms come from the Texas General Land Office (Veterans Land Board), Capital Farm Credit, Herring Bank and the USDA Farm Service Agency, as published in September 2026, and change often. Legal references are to the Texas Property Code, sections 5.062, 5.066, 5.076 and 5.077. Rates, fees and eligibility depend on the lender, the land and your credit. Get written terms from at least two lenders, and have a Texas real estate attorney review any owner-financed contract before you sign. Page published September 2026.