Can I Get a Loan to Buy Land in Joshua Tree or 29 Palms?

Yes, it is possible to finance vacant land in Joshua Tree, Twentynine Palms and other parts of the California High Desert.

But getting a loan for vacant land isn't necessarily as simple as getting a mortgage for a house.

The lender matters.

The land matters.

The amount you're borrowing matters.

And perhaps most importantly:

What you intend to do with the land matters.

A buyer purchasing five acres to build a primary residence may have different financing options from someone buying remote acreage to hold for twenty years.

So before you fall in love with a $25,000 parcel and assume you'll put 10% down and finance the rest, understand how vacant-land lending can be different.

Can You Get a Mortgage on Vacant Land?

Usually, we wouldn't call a loan on raw vacant land a conventional home mortgage.

There isn't a completed house securing the loan.

Instead, buyers may use financing such as:

• Vacant-land loans
• Lot loans
• Construction loans
• Construction-to-permanent financing
• Seller financing
• Other financing secured by existing assets

Which options are available depends on the borrower, lender, property and intended use.

Why Are Land Loans Different From Home Loans?

Imagine two $50,000 purchases.

The first is a small existing house.

The second is five acres of undeveloped desert land.

Those aren't necessarily equivalent collateral from a lender's perspective.

Vacant land may have:

• No residence
• No water connection
• No electrical service
• No septic system
• Dirt-road access
• Limited improvements
• A smaller pool of potential future buyers

If a borrower defaults, undeveloped land may also be more difficult for the lender to resell.

Because of that, lenders may approach vacant-land loans differently from traditional residential mortgages.

How Much Down Payment Do I Need for a Land Loan?

There is no single down-payment requirement that applies to every vacant-land loan.

That's important.

You'll find plenty of websites saying:

“Land loans require X% down.”

But actual requirements depend on the lender, borrower, property and loan program.

A lender may consider:

• Credit
• Income
• Existing debts
• Loan amount
• Purchase price
• Appraised value
• Property location
• Access
• Utilities
• Improvements
• Intended use
• Development plans

Ask lenders what they require for the specific type of High Desert property you're considering.

Does It Matter Whether the Land Has Water and Power?

It can.

Consider two five-acre parcels.

Parcel A

• Maintained road access
• Public water meter
• Electrical service nearby
• Residential zoning
• Relatively level terrain

Parcel B

• Remote dirt-road access
• No public water
• No well
• No electricity
• No existing improvements

Both may be perfectly legitimate five-acre parcels.

But a lender may not necessarily evaluate them the same way.

Infrastructure can affect development potential, value and marketability.

That's why it's useful to describe the actual property when talking with a potential land lender rather than simply asking:

“Do you make loans in Joshua Tree?”

Will a Bank Finance a $20,000 Piece of Land?

This is where High Desert buyers sometimes encounter an unexpected problem.

The property can actually be too inexpensive for some traditional lenders.

Suppose you're buying land for $20,000.

You have $5,000 to put down and want a $15,000 loan.

The lender still has expenses associated with:

• Processing
• Underwriting
• Documentation
• Valuation
• Compliance
• Closing
• Servicing the loan

A very small loan may simply not make economic sense for that lender.

So strangely enough:

A $20,000 property can sometimes be harder to finance than a $200,000 property.

Not because it's more expensive.

Because the loan is so small.

Where Can I Find a Vacant-Land Lender?

Start by looking beyond the standard home-mortgage search.

Potential sources may include:

• Local banks
• Credit unions
• Community banks
• Agricultural or rural-property lenders
• Specialty land lenders
• Construction lenders

Ask specifically whether the institution finances individual vacant residential parcels in San Bernardino County.

Then describe the property.

For example:

“I'm considering purchasing five acres near Joshua Tree for $45,000. The parcel has road access and public water, electricity is nearby, and I plan to build a primary residence in approximately two years.”

That's a much better question than:

“Do you lend on dirt?”

Although technically accurate.

Does the Lender Care What I'm Going to Do With the Property?

Possibly.

There can be a significant difference between:

“I'm buying land to build my primary residence.”

and:

“I'm buying 20 acres because dirt seems cheap and maybe it'll be worth more someday.”

A lender may want to understand whether you're planning:

• Immediate construction
• Future construction
• A manufactured home
• Long-term investment
• Recreational ownership
• Another use

If you're planning to build relatively soon, construction financing may be more appropriate than a stand-alone land loan.

Can I Finance the Land and Construction Together?

Potentially.

If you're purchasing land specifically to build a home, ask lenders about construction-to-permanent financing.

Instead of:

Land loan → pay closing costs → construction loan → pay more closing costs → permanent mortgage

some programs can combine stages of the project.

The lender will generally need considerably more information than it would for a simple land purchase because it may also evaluate:

• Building plans
• Contractor
• Construction budget
• Timeline
• Permits
• Site preparation
• Completed value

If you're planning to build soon, investigate construction financing before buying the parcel.

You may discover that the lender has requirements that should influence which land you buy.

Can USDA Help Me Buy Land in Joshua Tree or 29 Palms?

Possibly—but there is an important distinction.

USDA Rural Development offers homeownership programs intended to help qualifying households purchase or build primary residences in eligible rural areas.

For qualifying borrowers and eligible properties, USDA financing may potentially be used as part of a home construction project.

That does not mean USDA provides every buyer with a zero-down loan to purchase raw High Desert land and hold it indefinitely.

USDA homeownership programs have requirements involving matters such as:

• Household income
• Property eligibility
• Primary residence occupancy
• Property standards
• Borrower eligibility
• Program and lender requirements

USDA also has something called Rural Housing Site Loans, but don't let the name confuse you.

Those particular site-loan programs are designed for qualifying nonprofit and public organizations developing housing sites for low- and moderate-income households—not simply individual consumers looking for financing to buy a random five-acre parcel.

If your goal is to purchase eligible property and build your primary residence, talk with an approved USDA lender about whether your specific project could qualify under an applicable USDA homeownership or construction program.

What About a USDA Construction Loan?

USDA's Guaranteed Loan Program includes a Single-Close Construction-to-Permanent option through participating lenders.

For an eligible borrower and project, this can combine construction financing and the permanent home loan into a single transaction.

Again, this isn't:

“USDA will finance my five acres because Joshua Tree is rural.”

It's financing associated with creating an eligible primary residence.

That's a very important distinction.

Can I Use a VA Loan to Buy Land in 29 Palms?

This is obviously an interesting question around Twentynine Palms because of the Marine Corps Air Ground Combat Center.

A traditional VA purchase loan generally isn't intended simply for buying vacant land and holding it.

However, VA construction financing may potentially be available through lenders offering appropriate programs when an eligible veteran is purchasing land as part of building an approved primary residence.

Finding lenders that actually offer VA construction financing can be a separate challenge.

If you're an eligible veteran planning to buy High Desert land and build, talk with an experienced VA construction lender before purchasing the parcel.

Don't assume the property will work for the financing simply because you're VA eligible.

Can FHA Finance Vacant Land?

Traditional FHA home financing isn't designed as a stand-alone raw-land investment loan either.

Construction-related FHA financing may potentially apply to qualifying home-building projects.

Again, the distinction is:

Financing dirt

versus:

Financing the creation of a residence that happens to begin with dirt.

Those are different lending conversations.

Can I Finance Land for a Manufactured Home?

Potentially, and this is another reason to start with your entire project.

If your goal is:

Buy land + install manufactured home

tell lenders exactly that.

Depending on the home, property, borrower and program, financing options may exist that treat the land and manufactured home as part of the overall residential transaction.

The parcel itself still matters.

A lender may need information concerning:

• Zoning
• Access
• Water
• Septic
• Utilities
• Foundation or installation
• Manufactured-home eligibility
• Property value

Don't buy the cheapest piece of land you can find and then ask the manufactured-home lender to make it work.

Find out what the lender needs first.

What If the Seller Offers Financing?

Now we're talking about something you'll occasionally see in the vacant-land market.

A seller may agree to finance the buyer's purchase rather than requiring the buyer to obtain all of the financing from a traditional lender.

For example:

Purchase price: $40,000
Down payment: Negotiated
Balance: Seller financed
Interest: Negotiated
Term: Negotiated

Those numbers are merely an illustration. Seller-financing terms vary considerably.

Seller financing can sometimes make a property accessible to buyers who don't want or can't obtain a traditional land loan.

But don't confuse less traditional with informal.

Seller financing should be properly structured and documented using appropriate escrow, title, lending and legal professionals.

Is Seller Financing Automatically a Good Deal?

No.

Easy financing can make mediocre land look more attractive than it really is.

That's dangerous.

Suppose someone offers:

“Five acres! Only $500 down and $299 a month!”

Your first question shouldn't be:

“Where do I sign?”

It should still be:

“What exactly am I buying?”

Investigate:

• Property location
• Boundaries
• Legal access
• Zoning
• Water
• Utilities
• Septic feasibility
• Title
• Easements
• Development potential

Bad dirt doesn't become good dirt because the monthly payment is affordable.

Should I Use a Personal Loan to Buy Land?

Some buyers use unsecured financing for relatively inexpensive parcels.

Whether that's financially sensible depends on the terms.

Compare:

• Interest rate
• Fees
• Monthly payment
• Loan term
• Total interest paid

A loan that is easier to obtain can also be considerably more expensive.

Look beyond:

“Can I afford the monthly payment?”

and calculate:

“What will this land actually cost me by the time the loan is paid off?”

Can I Use Equity From My Current Home?

Some buyers choose to access equity from another property through financing such as a home-equity loan or HELOC.

That can potentially provide cash for purchasing vacant land without obtaining financing against the vacant parcel itself.

But you're potentially using your existing home to finance speculative or undeveloped property.

That changes the risk.

Discuss the financial, lending and tax implications with the appropriate professionals before deciding whether that strategy makes sense.

What If I'm Buying Land as an Investment?

Tell the lender.

Financing a primary-residence construction project isn't necessarily the same thing as financing investment land.

Some residential programs require owner occupancy.

If you're buying land simply to hold and eventually resell, you'll likely need financing appropriate for that purpose.

Don't create a financing strategy around a loan program whose occupancy or property requirements don't match what you're actually doing.

Should I Find the Land or the Lender First?

Ideally, investigate both at approximately the same time.

You don't need to know the APN of your future property before having an initial conversation with a land lender.

Find out:

• Does the lender finance vacant land?
• What areas do they serve?
• What loan amounts do they consider?
• What general down payment is expected?
• What property characteristics matter?
• Are utilities required?
• Does road access matter?
• What documentation will be needed?
• How long does financing usually take?

Then use those answers when looking at land.

If you need financing, financeability becomes one of your search criteria.

Don't Let Financing Make the Property Decision for You

This is worth remembering.

A property isn't good simply because someone will finance it.

And a property isn't necessarily bad simply because traditional financing is difficult.

Remote High Desert land can be unusual collateral.

The important thing is understanding:

The land.

The financing.

The intended project.

All three need to make sense together.

Start With What You're Trying to Accomplish

If you contact me and say:

“I want five acres in Joshua Tree.”

I'll have more questions.

If you say:

“I want approximately five acres, I'm financing the purchase, and I'd like to build my primary residence within three years. Public water and reasonable road access are priorities.”

Now I know what we're looking for.

Or maybe:

“I have $30,000 cash. I want remote acreage near 29 Palms that I can hold for ten years.”

Different plan.

Different financing.

Different property.

That's why I tell High Desert land buyers:

Tell me the property characteristics you want, not merely the city you think you want.

Found Land You Want to Finance?

Send me the listing or APN.

It doesn't have to be one of my listings.

If you find land on Zillow, Realtor.com, Land.com, another brokerage site or while driving around Joshua Tree or Twentynine Palms, send it to me.

Tell me:

• Your approximate budget
• Whether you're paying cash or financing
• What you intend to do with the property
• When you expect to develop it
• Which property characteristics matter most

I can help you identify the questions worth investigating before you get too attached to the parcel.

A national real estate website can show you what's listed.

I can help you understand the landscape.

Looking for Land in Joshua Tree or 29 Palms?

Tell me what you want the property to do for you.

Dawn Anderson is a California real estate broker serving buyers and sellers in the High Desert. This information is provided for general educational purposes and is not lending, financial, tax, legal or investment advice. Loan availability, interest rates, down payments, eligibility requirements, property standards and program requirements vary and can change. Buyers should obtain current loan information directly from appropriately licensed lenders and independently investigate the property before purchasing.