6 Best Land and Lot Loans in Texas


Texas land loans let you secure a property and then build a home or business when you’re ready.

Key Terms

  • Land loans are a great way to build a second or vacation home.
  • Land loans don’t require that you purchase any insurance or PMI like traditional home loans do.
  • Land loans are also available for agri-business or recreational purposes, like hunting or fishing.

You’ve heard it said many times—everything’s bigger in Texas. That goes for the acreage in the Lone Star State, too; according to the U.S. Census Bureau, Texas has a whopping 261,268 square miles of land, offering plenty of space for everyone, ranchers and farmers included. 

Even with all that acreage, it’s becoming more and more difficult for Texans to buy a piece of texas real estate. Prices are going up, especially with new and modern homes. Some turn to older homes or renovations as an alternative, but that can become time-consuming and cost-prohibitive, and you don’t always get the home you want. The good things about land purchases though is that your purchased land may serve as collateral for an eventual Texas construction loan

With a Texas land loan, you can take a creative approach, nailing down the lot size and location you want and then building when the time is right. With the value per acre of land in Texas at an affordable $7542.04, per the New Estimates of Value of Land of the United States, you may find that buying acreage and then building in time is a much more manageable prospect, especially for vacation homes. 

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The pros and cons of a land loan in Texas

One of the big reasons why Texas home prices are growing so quickly is that demand often outstrips supply. This means it’s not only harder to save for a home that keeps getting more expensive, but when you’re ready to buy, you might not be able to get the home you want in the area you want. 

Since most people don’t consider land and lot loans, and they’re all competing for the same inventory, you can skip the bidding wars and rejected offers, secure your lot, and plan for the next step. Owning a vacant lot also means you won’t have to pay most kinds of insurance on your property, and your property taxes will be low until you’ve built your home. So you can put that money towards your construction plans. 

Another big benefit is that vacant land is always more affordable than homes, so you can look for property in the areas you really want to live in and still afford to purchase your lot. 

What are the downsides to this approach? Land loans can have higher interest rates than mortgage loans. Lenders also sometimes ask for larger down payments, but with prices per acre as low as they are, you may find that a down payment on a land loan is not that scary, even for rural land with high acreage. 

Get Quotes for Your Land Loan

6 Best Texas land loan lenders

If you’re in the market to purchase land in Texas, consider these land loan lenders that are available for projects in the state.

1. Frost Bank

Established in 1868 in the back of a mercantile store in San Antonio, Frost Bankers, Inc. is a dominant financial leader. It currently has $52.9 billion in assets and is one of the 50 largest U.S. banks. Frost Bankers offers personal lot loans for the building of residential property.

We asked Frost Bank for more details on their vacant land loan process and here is what they said:

  • Fixed interest rates
  • 0.25% rate discount with automatic payments from a Frost Checking or Savings account
  • Rates and terms vary on loans $150,000 and greater
  • 15-year amortization
  • Borrow up to 75% of the sales price or appraised value (the lower of the two) on lots valued up to $300,000
  • .50% Origination fee on all Lot Loans

When you’re ready to connect with a loan officer, use our form to quickly match with land and lot loan programs based on your specific circumstances.

2. CommunityBank of Texas

CommunityBank of Texas is a community bank that offers big bank services. It is a division of Allegiance Bank and serves a significant portion of Texas. Among the loan offerings at CommunityBank of Texas are lot and land loans for individual homeowners who intend to build their future home.

We reached out to CommunityBank of Texas to discuss land loan details, which you can read about below:

  • Lot loan may be to purchase a lot that currently has a structure to be torn down after purchase.
  • Residential lot loans include term loans to the individual consumer to purchase a residential lot/land intended for their future home site (primary or second/weekend home site).
  • Several lot products are available with a short or longer term maturity.
  • Short term products are for homeowners that intend to build their home within that period. The short term loan options are interest only monthly while the homeowner uses that time to engage a contractor, design the plans & specs for the future home. T
  • The longer term loan product is for buyers that do not plan to build in the near term

When you’re ready to connect with a loan officer, use our form to quickly match with land and lot loan programs based on your specific circumstances.

3. Beacon Federal Credit Union

Beacon Federal Credit Union was started in March 1949 as DuPont La Porte Federal Credit Union serving the areas of La Porte, Baytown, Seabrook, and Deer Park, Texas. Beacon Federal Credit Union offers land loans, home equity loans, mortgages, and mortgage refinancing.

We reached out to the lending experts Beacon Federal Credit Union to discuss land loan details, which you can read about below:

  • Fixed-rate loans with 15-year maximum term
  • 10% minimum down payment
  • Loan amounts between $25,000 and $150,000 (up to 90% of property’s market value or sales price, whichever is less)
  • Finance land purchases for residential building or recreational purposes
  • Loan payment will not include taxes
  • Can convert to a construction loan
  • Use to refinance existing land loans (no cash-out)

When you’re ready to connect with a loan officer, use our form to quickly match with land and lot loan programs based on your specific circumstances.

4. Texas First Bank

Texas First Bank was founded in 1973 by a group of investors after the purchase of First State Bank of Hitchcock. By 1999, it had grown to cover banking services for 13 cities in Galveston County. Texas First Bank offers land and lot loans for property investors throughout Texas.

We reached out to Texas First Bank to discuss land loan details, which you can read about below:

  • Lot loans available for borrowers who intend to begin construction.
  • Flexible loan terms available.

When you’re ready to connect with a loan officer, use our form to quickly match with land and lot loan programs based on your specific circumstances.

5. Veterans Land Board

The Texas based Veterans Land Board was established in 1946 to help those veterans of Texas to be able to purchase property and build homes. The Veterans Land Board works exclusively with veterans and active military in Texas by providing opportunities for land loans for up to $150,000.

We reached out to Veterans Land Board to discuss land loan details, which you can read about below:

  • Available to veterans only
  • Available in Texas only
  • 5% minimum down payment
  • Must contain at least one acre, excluding any portion beneath a dedicated public roadway or navigable waterway or subject to frequent inundation or otherwise unusable.
  • Must have legal, usable access to a public road. Access must be a minimum of 60 feet wide or meet the county public road width requirements, whichever is greater. “Usable” means that it can be driven on by a standard passenger car in inclement weather.
  • Must not be zoned strictly for commercial use like an agribusiness.
  • Must not have been owned by you or your spouse within the previous three years.
  • All trash/debris, tires or dilapidated structures must be removed prior to closing.
  • VLB provides financing on tracts up to $150,000 with a minimum five percent down payment and a fixed-rate 30-year loan term. The five percent down payment is subject to credit approval and minimum credit score requirements.
  • A $325 appraisal and contract service fee is due at the time of application.
  • There is no pre-payment penalty.

When you’re ready to connect with a loan officer, use our form to quickly match with land and lot loan programs based on your specific circumstances.

6. Randolph-Brooks Federal Credit Union

Randolph-Brooks Federal Credit Union serves the Austin, Corpus Christi, Dallas-Fort Worth, and San Antonio areas of Texas with all of their banking needs. Randolph-Brooks Federal Credit Union offers a number of products when it comes to land loans to help meet customers’ needs when looking to purchase property.

We reached out to Randolph-Brooks Federal Credit Union to discuss land loan details, which you can read about below:

  • Land loans available even if you are yet ready for construction
  • Term options up to 15 years
  • Free 60-day rate lock, once a specific property is identified
  • Up to 90 percent loan to value financing
  • No building requirements from the lender (subdivision requirements may apply)
  • Option to set up automatic payments
  • Additional qualifications including debt-to-income (DTI) limits are required to obtain 90% financing on land loans.

When you’re ready to connect with a loan officer, use our form to quickly match with land and lot loan programs based on your specific circumstances.

Does a Texas home land loan make sense for you?

If you find that the Texas property market is a little too hot for you, and you just can’t seem to get enough saved to buy a home, then a land or lot loan is a great idea. 

Likewise, if none of the homes in your price range will work for you and your needs, you might prefer the option of designing and building exactly what you want from scratch. Texas land loans are also great choices for those looking to build second homes or vacation homes that they don’t need to move into immediately. 

Take a moment to consider the overall cost, too, once you eventually build. With the amount of creative and affordable construction techniques out there today, you could very well purchase a lot with a land loan and then build for far less than a new, built home. 

If you’re looking to explore land and lot loans in other states, check out our national overview of land loans as a starting point in your search.

Find a Land Loan Specialist

Joshua Holt

Joshua Holt is a licensed mortgage loan originator (NMLS #2306824) and founder of Biglaw Investor. His mortgage expertise lies in the areas of professional mortgage loans, particularly for lawyers, doctors and other high-income professionals. Prior to Biglaw Investor, Josh practiced private equity mergers & acquisition law for one of the largest law firms in the country.

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