Many people want to own their own homestead or piece of property, but they have no idea how they’re ever going to accomplish it. With land being so expensive and down payments often exceeding what they have on hand, many are wasting away wishing for something considered to be a pipe dream.
It can take years to come up with enough money to make a down payment. This can be very frustrating if you’re wanting to have your own homestead and property. Here are some ways to get land with (almost) no money down.
Keep in mind that almost no money down doesn’t mean no money down. While you’re searching you’ll want to be saving as much money as you possibly can toward the expenses of buying property. It’s not unusual for a couple to look for a few years for that perfect piece of property.
Also, you’re going to have to do some legwork if you really want that piece of property. That being said, here are some ways that you too can join the homesteading movement and have your own piece of land, if you’re willing to do the legwork.
Don’t Buy More Than You Need
It’s easy to get caught up in buying more property than you’ll be using. All too often we drive by homesteads that have acres upon acres of property when in reality, they’re only using maybe one or two of those acres. If you’re not going to be using those extra acres, then you probably don’t really want to be paying for them unless they’re going to be making money for you.
Before you begin, sit down and list out what your goals are going to be. Determine how many acres you’ll want, whether or not you need a dwelling on that property before you buy or you can build your own or live in a trailer or even a tent if weather permits, determine what you’ll be doing (farming, gardening, animals etc.). Jot all of this down and then prioritize it so that you have that handy when you start your search.
Gather Local Newspapers
Find the area that you wish to live in and go to the nearest grocery store or gas station and gather up the free periodicals that have property listed in them.
There are often two or three different local newspapers to choose from so grab them all. That way, you can compare what you see. Often the same ad will be in all of the newspapers so you’ll want to read the ads carefully.
Have your list handy as you’re going through the newspapers. You’re looking for property or homes that fit as many of the important things on your list as possible.
Consider price, location, size, potential, and whether or not there is a water source on the property. You’re always going to need water so if there isn’t a well, spring, or pond, you may need to look elsewhere.
You’re looking for any of the following:
Rent to own property or lease option
A rent to own property is just like it sounds. You rent the property out for a period of time and then you secure your loan and are able to make the purchase. There are a variety of ways that these work so you’ll want to have a clear understanding of how the particular one that you’re looking at works.
Typically, you rent the property for one to two years and a portion or all of the rent goes toward a down payment at a future date when you’re more able to secure your loan. Read the fine print, double check all of the terms and have an attorney look everything over before you sign.
For sale by owner
These deals can be great. They go by a variety of names and work in several different ways as well. The owner either acts as the bank and you make payments directly to the owner or their payee, or you work with an attorney and make the payments.
Again, read the fine print, have an attorney look it over and make sure that you fully understand everything that you’re reading before you sign.
If a landowner hasn’t paid on their property in a timely fashion, and if they are significantly behind on their payments the property may go into foreclosure. Here is where you can come in.
There are a few ways to take advantage of foreclosures. You can offer the landowner the amount of money that the property is being foreclosed on in exchange for the title to the property. This gets the landowner out from under the property and puts you into ownership.
This is typically done in the pre-foreclosure status. Or, you can go to the auction and purchase the property for the amount of foreclosure which is often pennies on the dollar in comparison to a regular land payment.
Save your extra cash, your tax refund, any windfalls or bonuses and you may be able to find something for just a few hundred dollars in this fashion.
Many properties have a tax lien on them. These are basically back taxes or payments on the deed that have been unmet. You can go to your local courthouse and look these up. You can also get a copy of the properties that are going up in the next auction from the local county treasury office.
After a period of time the government will auction these pieces of property off in an effort to recoup their taxes. This is where you come in. You can go to this auction and pay the tax lien off and then the property will be transferred to your name. Watch local newspapers and see when such properties are going up for auction and attend the auction.
Save your tax refund or any bonuses or windfalls of cash for such purposes and you may find that you have more than enough money to buy such properties. Just remember to pay your taxes on the property so that you don’t lose the property in a future auction.
Low or no money down
Occasionally you’ll find property that is rock bottom priced. Keep in mind that you should never purchase property sight unseen. That is a huge mistake.
If it sounds too good to be true, it probably is too good to be true. Check and verify all potential pieces of property especially if they just sound too good to pass up.
You may be saving yourself a huge headache in the long run. If you do find that gem, make every effort to purchase it at that price and take good care of it. Some things are just meant to be.
Hire A Real Estate Agent
You can also hire a real estate agent that is well-versed in self-reliant lifestyles or homesteading. Take in your list of what you are looking for and make sure that the agent has a clear and full understanding of what you’re looking for.
If the agent is a good one, they should be able to come up with at least a few properties for you to go and take a look at. Even though you’re going through a real estate agent you can still find for sale by owners, rent to own, and low money down deals.
What To Do When You Think You’ve Found The Right Property
If the address is listed, do a drive by and see what the property looks like. If you’re still interested, then it’s time to make a phone call to the owners and discuss the total price, what they want as a down payment and then make arrangements to go and see it.
This can be a crucial time. You may be able to talk the owners down in price or reduce the amount required for a down payment in exchange for some specific work that may need to be done on the property. Go to this meeting with an open mind and as many ideas as possible.
The goal here is to develop a rapport with the owners and see if you can gently talk them into a lower down payment or price for the land. After you’ve looked things over, it’s time to do some thinking away from the owner.
Tell them you’ll be in touch in a day or so and go home and find out the zoning for this particular piece of property (unless you have already done this). Is is commercial or residential? If you’re planning on having animals on the property (other than cats and dogs) you’ll need to make sure that it’s zoned as agricultural.
You’ll also want to make sure that it’s not located in a flood zone. There are terms that you should watch for including “one hundred year flood zone” (in which case, it may be in a flood zone but there hasn’t been a flood there in over 50 years. It’s still at risk and probably not what you’re looking for).
Does the property have a well or is it connected to city water? What about the septic system? Is it in place and working or perhaps close enough to town that it’s on the sewer system? Is there a flat area on the property where you could build a house? What about a flat space for a garden?
Once you’ve determined all of this information it’s time to decide if this is the right property for you. Work up your numbers and call the owner back.
If you and the owner are in agreement there are only a few things left to do. You’ll want to hire a title company to do a title search. The title search makes sure that the current owners are truly in possession of the property with the right to sell the property.
The title search also ensures that there are no liens against the property nor judgments. Liens or judgments could mean that the current owner owes money to someone or a place of business and until that payment is made there is a lien or judgment on the property which won’t allow it to be sold until such a time as this lien or judgment is settled.
However, if there is a lien or judgment on the property, you may be able to satisfy that lien or judgment in exchange for the title to the property. It’s always worth your effort if you can do this. It’s often a small amount of just a few hundred dollars or so to pay the tax lien or judgment.
Important Things To Remember When Seeking Land With (Almost) No Money Down
You’ll want to know your credit score. The higher your credit score the easier it is to get a loan or make a purchase. You can find your credit score online and if there are any issues with it be sure to call the credit company and get it resolved.
Pay your bills on time as much as possible. This will put you in better favor with potential sellers when they do research on you. While you may not have credit, they can see if you have paid your utilities on time, your phone bill, etc. These can be a huge factor in determining whether or not they are willing to sell to you.
Set a goal of using no more than 25 percent of your credit at one time. Keep your number under 25 percent of use and your score will typically be higher. Lenders like to see a lower debt to income ratio and will be far more likely to lend to you if you keep it under 25 percent.
Be patient, it can take many months or even years to find the ideal piece of property for your needs and desires. It’s okay to look at several different properties and take your time looking, this allows you to be more selective and to save even more money so that you’ll have a smaller monthly payment.
Another factor to keep in mind is that you need to really dig deep and research any piece of property before you by. If the property has been on the market for a long period of time, if the property is in pre-foreclosure, the owner may be more willing to take a smaller sum of money just to get out from under their payment and move on their way.
There are many real estate agents that work with potential buyers on such properties. You can also find websites that list pre-foreclosures and properties that have been on the market for a long period of time.
Low And No Money Down Loan Options For Homesteaders
When it comes to loans there are a few different kinds that you can choose from. Not all will work depending on the particular circumstances so you’ll want to choose carefully and determine which would work best for your particular needs.
1. Fannie Mae
The Fannie Mae Home Ready Loan is a loan that is backed by the government. There are a variety of qualifications to meet however, when compared to conventional loans it may be a great option as long as your credit score is within their current parameters.
These parameters will fluctuate and be on a case by case basis so you’ll want to work closely with a loan officer. Often, a down payment of only about $3000 could put you into a home with this loan.
2. USDA Loan
This “beginning farmer” loan is also backed by the government. With as little as 5 percent down for the down payment it may be what you’re looking for.
You’ll only be able to own a preset amount of acres and you must have at least 10 years prior experience of farm work to qualify. Farm Service Agency representatives can help you to determine whether or not your experience will qualify you.
3. National Sustainable Agriculture Coalition
This is a program that offers assistance with a down payment for those who apply for a loan via the USDA Beginning Farmers or the Socially Disadvantaged programs such as Female Farmers or Homesteaders who are qualified to apply for the loan assistant program.
4. Minority And Women Farmers And Ranchers
For those women and minorities who have three documented years of experience working in agricultural and a 5 percent down payment or assistance from the USDA Beginning Farmers or Socially Disadvantaged programs this loan may be a viable option.
5. FSA Operating Loan
As a low to no money down payment program this one allows for up to $35,000 for start-up and agricultural costs. Many of the projects that homesteaders can use this money for are purchasing animals or plants, fencing, farm machinery and fertilizer for their crops.
6. USDA Rural Development
This particular loan cannot exceed 20 acres of land. There are no income limits to apply, however, you’ll still have to meet the other requirements on this loan.
7. Seller Financing/Owner Financing
A really motivated seller may be willing to take payments on the property so that you can get into it. You could offer a larger monthly payment in lieu of a huge down payment as one option for such a transaction. You could also offer to barter or exchange specific work skills in exchange for a down payment.
Perhaps you have something the potential seller desires. It could be an RV, a boat, a specific model of car etc. You could offer to trade said item in exchange for the down payment on the property or, if the item is worth enough, you could offer to exchange it outright in exchange for the title to the property. Always make sure that you have a legal agreement that is properly signed in such cases.
9. VA Loans
If you’ve served in the military you may be able to get a VA loan. These don’t require any money down. If you can meet the specific income and employment qualifications you may be able to go this route and just make monthly payments.
10. Take Over Payments/Loan Assumption
Some loans can be simply taken over. While many overlook this option, there are a few out there that will be qualified as able to be assumed.
Perhaps family or friends will be willing to loan or gift the amount for the down payment. You don’t know until you ask. If you have a family member or friend that is able to do this you’ll need to have it properly drawn up.
12. Micro Lender
There are many “micro lenders” online today. They may also be referred to as peer to peer lending. Typically these loans are under $35,000 but if you qualify and can meet the requirements for income etc. you may be able to go this route.
13. Navy Federal
This is different than a VA loan. The funding fees are lower than VA funding however, if you’ve been in the military, you can utilize this particular method as long as you meet the requirements. You will need to be a member of the Navy Federal Credit Union.
14. Credit Union
If you’ve been a longstanding member of a credit union you may be able to use a credit union loan to secure a piece of property. Each credit union is ran slightly different so you may want to check with a few of them to see what they can offer you.
15. Private Mortgage Insurance
Private mortgage insurance, or PMI, will allow you to pay ten percent down in lieu of twenty percent down on a piece of property. There are some advantages and disadvantages of such arrangements and as you pay down the loan you’ll be able to reduce the mortgage payment.
16. Private Lender
Many younger generation land buyers will have a parent or grandparent front the money and buy the property. In exchange the younger generation will make the payments and work out the arrangements with their family member in exchange for the title.
This will work well as long as the younger generation are responsible and follow through. Always use a contract and remember that there may be sibling squabbles if it’s not done right.
17. First time Home Buyer
There are a variety of “First Time Home Buyer” deals out there. You just have to look for them. Local and state agencies offer steep discounts and deals as first time home buyers. The programs will vary from one region to the next but it’s always worth looking into to find a piece of property that is affordable.
If you’re looking for a piece of property for a homestead, these ideas should help you to get started. You don’t have to be wealthy for a homestead. You just have to have the right frame of mind and be willing to work for what you want.
In many instances it can take three to five years to find the ideal piece of property so don’t give up and keep exploring options. If you really want it, you can have it with just a bit of ingenuity and determination.