Buying A House On Acreage

by Torrey
(Pennsylvania)

Hi Kate, If I want to purchase a home with 16 acres included, how is mortgage criteria different from just buying a house on a one-half to three acre lot?

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Hi Torrey,

Mortgage companies like to lend in areas where properties are similar. In your area, are most of the homes situated on normal city sized lots or as you describe, 16 acres?

Depending on the mortgage program and the specific mortgage company, you'll hear the term excess acreage. Ask how many acres are considered excess to get an idea of that lender's comfort level for loaning on land.

Inquire into the number of loan programs applicable to buying a house on 16 acres. Look for more than one option.

You may discover the lender is comparing the total price of the home on 16 acres to a similar property with only one acre. Other lenders give full value to the first few acres and only nominal value to the remaining land. This can affect the amount of your required down payment.

The mortgage loan approval will also depend on your intended use of the 16 acres. Is the land for privacy, a nice view, or do you intend to board horses? Commercial use of land can narrow your choice of residential loan programs.

Here's a thought - If buying land is common where you live, have you considered calling a local lender who specializes in homes on acreage? If so, lending on 16 acres could be business as usual for them.

Remember to take notes when you shop for lenders. Write down questions like these before you make contact and take notes during the conversation.

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