May 11, 2022


Buying land to build a house is a dream for many people. Once they get it, building the home of their dreams and making sure that everything goes well in the process is another matter entirely. 

Not only is it a long process to find land to purchase, but it is an even longer process to build a house on it. Regardless of the time it takes, it will be one of the most rewarding experiences of your life once it is complete. We have put together an article to get you started to make it easier for you! Keep reading to find out more.

How To Get Started

Finding vacant land is often more challenging than it appears to be. Numerous factors may affect your decision while purchasing land for the new construction. Let's look at some of the most common ones.

The Ultimate Guide To Buying Land

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Find Land Available For Sale

Finding the perfect land for your dream home is just as complicated as any other property decision. First, you need to consult multiple real estate agents for full options. Real estate agents will show you all the active listings.

Once you filter out properties with the most potential, with the help of an experienced real estate professional, pick a land that is most cost efficient. Also, according to most property experts, the land cost should only be 20-30% of the construction costs. Do the math before making a final decision!

Additionally, make sure the land you have chosen is the right one before getting it approved. A tip is to make sure the land has utility lines since many lots in rural land have terrible cell phones or internet reception. Some lands don't come with utility hookups, and you will have to dig a well or share it with another property. Don't forget to check if the lot has a power supply, water, sewer, or septic systems.

Preparations And Approval

Finding vacant land in a decent area is not the only step, but it is also a very important one. To obtain approval, go to the local zoning authority to determine if the land can be used to build a house before taking any other steps.

Financing Options

Most people don't have the cash readily available for land purchase or construction. If the land you want to purchase is considered undeveloped or raw land (land with no utility lines and fixtures), you are eligible for land loans.

If you already have the money to pay for the land purchase, you won't have to go through extensive financing procedures. However, if you don't, there are financial options available. Keep reading to learn more about how you can afford to buy land to build a house.

Building Process

Building Process

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Once you have found land and figured out the finances, research professionals in your area that can help you build your dream home! These are some of the key professionals you need to consider.


It would be best if you had someone to manage the influx and consumption of raw materials and the other labor workers. Choose a professional that is well known in your area or one that your real estate agent has recommended.


You need to hire a licensed professional for all your building needs. In some cases, your builder and contractor are the same people, but that solely depends on the size and type of their business.


Unless you are working with pre-existing plans, you will need an architect for the exterior design and interior floor plan. To make your vision come to life, make sure this individual understands what you are looking for and can deliver the project on time.

Know What You Are Looking For

Building a house on vacant land requires a ton of responsibilities, not the least of which is getting the perfect land and having decent building skills. When building a home, you need to create a bucket list to minimize extra costs. Here are a few things to keep in mind:

Know What You Are Looking For

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Find Out How Much Land You Really Need

The first question for many that pops up when building a dream home is, “how much land should I buy for the house?”

This varies from person to person, with some people preferring large lands to raise animals by their house while others may not be able to afford that. 

This brings us to the other crucial point - comfort and affordability. The bigger the land, the more you have to pay upfront (down payment), and the higher the property taxes.

What Area Do You Want To Live In?

What Area Do You Want To Live In?

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Close your eyes. When you imagine your perfect home what do you see? Do you see beautiful scenic views? Can you hear the birds chirping in a woody wilderness? Or do you imagine a posh neighborhood with high-end mansions? Based on what you have imagined, ensure the area you choose matches where you want to live for the next few years (or even after retirement).

What Will Make This House Special For You?

Once you decide where you want to buy land and build your new house, you need to determine what will make this house unique. 

Most individuals want to build their own house and want to customize it fully to their liking, and many times, they have been unable to find something they like constructed already on the market. Let your contractor know in advance whether you want to raise animals in your backyard or enjoy a mini-golf course.

What Will Make This House Special For You?

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Do Your Research On The Laws

Before actually moving forward with purchasing land, look into the by-laws of the state you are building in.

You need to do your research beforehand to have an idea of what you are getting yourself into. Is there anything you aren’t allowed to do? Ask your real-estate agent to help you figure out the details in advance.

The Essentials

When it comes to building a custom home, one of the main issues is electricity. If the property is raw land or, in other terms, completely undeveloped, you will need to look for an electric service that will provide electricity to your home.

If you purchase undeveloped land, you must go to your local municipality to check if you have to drill a well or need a permit to share it with another existing home. If the vacant land you purchased doesn't have a sewer, you may need a septic system that includes a septic tank and a drain field.

Find The Right Plot

Now that you have decided what type of house you want to live in, you should start looking into the property market.

Find The Right Plot

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Finding the perfect property takes time. While it may seem like there is a lot of land available and you are bound to like something, do not wait until the last minute to start looking.

Make Use Of Real-Estate Website

One of the most accessible options is to open your computer, log in to a real estate website and filter your searches. Once you find the property that matches your description, call your local real estate agent and ask for a showing.

Word Of Mouth Is More Helpful Than You May Realize

Talk to people around you that are buying land or have bought land in the past. They have experienced the steps that you will be sharing soon! If you have no one around you that has gone through this, search for groups on social media. Make the connections so you have others to reach out to if you want advice or have questions.

Search For Expired Listings

Another way to buy land is to look into expired listings. A real estate agent has access to these listings and will help you. After some time, if there is no market activity, the listings expire and are no longer available on the realtor sites. This may be a brilliant option as not many people know about the property, and there are fewer chances of a bidding war.

Drive Out To The Area You Are Interested In

Just like you would go to a mall to buy something for yourself. Similarly, you can search for land by driving to the area you want to settle in. Some sellers put "for sale" signs on the property, so get searching!

Hire The Best Real Estate Agent

Hiring an expert real estate agent you trust is much more important than you think. A real estate agent can assist with finding you the perfect land and helping you make the final decision. The entire process is long and could get complicated, so a professional needs extra help to guide you. This is especially true if you are a first-time buyer, where you need an expert to make sure you do not become a fraud victim. A realtor can also help you save money on the land.

How Will You Afford It?

As soon as you find the plot, the main concern is how you will make the purchase. The first option is to buy it in cash, but not everyone has disposable money lying around in their bank accounts, so the other option is financing. Some of the alternatives are listed below.

How Will You Afford It?

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More often than not, the land has to be bought in cash, especially in the rural areas. There's an upside to paying in cash, mainly the fact that the lender is more likely to finance the construction of a house on the plot.

Types Of Loans

If you don't have the money available, you can always get conventional loans. Talk to your real estate agent and your bank to find out what loans you are eligible for or whether financing is an option for you.

Land Loans

If the property you buy is entirely undeveloped (no utility hookups), you are eligible for land loans. It is tough to get this type of loan approved as you need to provide a detailed plan for the land improvement. Even though getting land loans is cheaper, it requires a larger down payment and higher interest rates.

Lot Loans

Lot loans are more for developed lands with all the utility connections. This loan has a more affordable up-front down payment and interest rates.

Construction Loans

Lenders lend money on a short-term basis for basic construction needs like raw materials and labour costs. This type of loan is suitable for people who have cash or an asset of equal value that they are planning to sell to pay off the loan.

You need to have a perfect credit score along with a 20% down payment in most cases. The next step would be finding lenders offering construction loans.

Once the construction is complete, the loan can be paid in full or refinanced into a traditional mortgage.

Construction-To-Permanent Loans

This type of construction loan finances the entire construction. Once the construction is completed, the loan is turned into a fixed-rate mortgage. This type of loan is perfect for people who want to save on closing costs and mortgage financing.

Acquire The Building Permit

A building permit allows you to begin the construction officially. Having the permit proves that the building plan has been approved. To start the construction, you first need to finish closing the land. To obtain the permit, you may need to prove that you are legally the owner of that land.

Once you get the permit, you are good to go and ready for construction!


While buying land to build a house is an effort-heavy process, it is worth it in the long run. The entire journey from the land purchase to getting a land loan approved, and all the way to getting permits, requires attention to detail. Create a list of things "to-do" and ensure you run it by your real-estate agent and contractor to ensure you haven't missed anything. Good luck!

About the Author

As a native Washingtonian, Carlos Reyes’ journey in the real estate industry began more than 15 years ago when he started an online real estate company. Since then, he’s helped more than 700 individuals and families as a real estate broker achieve their real estate goals across Virginia, Maryland and Washington, DC.

Carlos now helps real estate agents grow their business by teaching business fundamentals, execution, and leadership.

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