Land loans in IdahoGovernment home loans pay for land only with a house on it or on the way. Which loan fits depends on when you plan to build.

Most people looking for a land loan in Idaho are asking two things at once: can I borrow to buy this parcel, and what happens when I want a house on it. The answer to the first depends on the second, so it is worth settling before you make an offer. If the house you have in mind is a manufactured home, the land matters in a second way: in Idaho the home can become real property only on land its owner owns or is buying, or in narrower cases leases, and how manufactured home loans work here is its own page.

The short version. FHA, VA and USDA home loans pay for land when there is a house to go on it: the land and the house financed together, or, with FHA and VA, a lot for a manufactured home you already own. Fannie Mae will not take a loan on vacant land either. Any other loan on land alone — some lenders call it a lot loan — is a lender's own product, on that lender's terms. I write land loans and construction loans, anywhere in Idaho.

What the government programmes do with land

FHA, VA and USDA home loans finance land only with a house on it or on the way

FHA finances land as part of a construction-to-permanent loan. Its handbook says the borrower must either be buying the land at the closing of the construction loan or already own it. FHA also lends on a lot for a manufactured home you already own, and that loan buys the lot alone.

VA works the same way. A VA construction loan closes before building starts, and the money can cover the cost of the land or what is still owed on it. It is a loan to build a home, and the land comes with the house.

USDA's guaranteed home loan is for a dwelling — buying one, building one, repairing one or moving one. Land by itself is not on that list, and USDA's direct home loan says the same in different words. Where the guaranteed loan pays for building a house, in a single construction-to-permanent loan, the price of the lot can be part of that loan.

So a buyer using a government home loan to build can put the land and the house together in one construction loan, and a buyer who already owns a manufactured home can finance the lot alone with FHA or VA. How a construction loan works in Idaho — who may build, who inspects the draws, what is decided at which closing — is its own page.

If you searched for a USDA land loan

USDA's site loans go to nonprofits, not to you

USDA does run a programme that finances building sites, and it is what turns up when people search for a USDA land loan. It is not for individuals. The regulation behind it says the applicant must be a nonprofit organisation authorised to provide housing sites. Someone buying a lot for their own house cannot borrow under it.

If what you want is a house in rural Idaho rather than the land under it, USDA's rural housing loan may be the programme you were after. It buys a house, not a parcel.

Conventional loans

Fannie Mae will not take a loan on vacant land

Conventional loans are the other place people look. Fannie Mae lists vacant land and land development properties among the properties it will not accept, so a land loan cannot be written to its rules.

That is the reason a loan on land alone is the lender's own product, unless the land is a lot for a manufactured home you already own. No agency sets its terms, so the lender does: how much down, for how long, and on what kind of parcel. Those differ from one lender to the next, and there is no common rulebook pulling them together.

Different is not the same as random, though. Lenders commonly ask for more down on raw land than on a lot that already has a road and utilities: around 20–25% on a lot like that, and on raw land anywhere from roughly a quarter or a third of the price up to half. That is a starting point, not a requirement. It moves with the parcel and with the lender, and narrowing it for your land is the first thing I will do once I know it.

The loan is shaped differently from a house loan, too. A land loan commonly runs for a shorter term than a home mortgage and often ends in a balloon, meaning whatever is still owed at the end comes due at once. Rates commonly run higher than on a home loan, because land is weaker collateral than a house: its value moves more, and it is slower to sell if a loan goes wrong. The term and the rate are the two numbers I leave off this page. They depend on which lender the file goes to more than anything else does, and the place for them is the estimate you get on your own parcel.

Which loan fits your plan

Build soon, build later, or hold the land

You plan to build soon. Put the land and the house in one construction loan. For a house built on the site, that is how a government-backed loan pays for the land, and it means you are not carrying a land loan while you plan the house.

You plan to build later. Buy the land with a land loan now, and finance the house with a construction loan when you are ready. What you put into the land does not disappear from the second loan: if you own the lot by then, your equity in it generally counts toward the required down payment or equity contribution on a conventional or an FHA construction loan. Many lenders will also let the land loan roll into the construction loan when you build. Not all of them do, which is a reason to choose the land loan with the house already in mind.

You plan to hold it. A land loan and nothing else. No government home loan lends on land with no house going on it, so the terms are the lender's from start to finish.

What Idaho asks of the land

Septic, water and road come before the house

None of this is lending. All of it is part of whether a house can go on the parcel, and it is better learned before you close on the land than after.

Sewage. If the parcel is not on a sewer, the house needs its own disposal system, and Idaho's rules say no one may install one without a valid installation permit. That is a state rule. It is the same outside Boise as it is anywhere else in Idaho.

Water. If the water will come from a well, a drilling permit from the Idaho Department of Water Resources comes before the drilling does, and the well has to be built by a driller licensed in Idaho.

Road. Road and access requirements are set locally, so the answer can change at the county line. Ask the county the parcel sits in before assuming the access you have meets them.

Whether a particular parcel will pass any of this is a question for the people who issue those permits, not for me. What I can tell you is which loan fits the plan.

The lender asks its own questions of the parcel, separate from the permits. Commonly: whether there is legal access to it, which utilities reach it, whether the zoning allows what you plan, a survey of the boundaries, and a percolation test of the soil if the house will be on septic. On larger or raw parcels, many lenders also want to see a plan for building.