Articles and news about FHA loans and HUD requirements. FHA loans are great for first-time homebuyers.

FHA Loans: Buying Land

There are several reasons why a house hunter looking for a home to purchase with a VA mortgage might want to buy a piece of land. In times when the housing market is favorably inclined towards new construction loans, some buyers might want a government insured loan for a proposed construction or new construction purchase; others might want to buy a piece of land for a manufactured home or mobile home.

As with many other parts of the FHA loan process, there are some do’s and don’ts to be mindful of when buying land as part of an FHA mortgage. There are plenty of pro-consumer laws enacted to protect buyers who want to own land, but there are also some good, common sense things buyers can do to protect themselves regardless of those laws. Some buyers purchase land from out-of-state, which makes the first rule of buying property more challenging.

Even so, it’s never a good idea to purchase land without having inspected it first. Buyers should treat a land purchase the same as they would the home itself–who would buy a house without having a look at it first? The same principle should guide a land purchase.

The FHA recommends doing some homework on the developer of the land–what is the developer’s reputation in the local area? Can someone there recommend them? What does your lender or real estate agent say about them. Applying for an FHA mortgage loan means you’ll be meeting plenty of people who might know who is reputable and who isn’t. Ask for an opinion.

Never give in to high-pressure sales tactics, especially those conducted over the telephone. Always insist on reading all contracts

24 Responses to FHA Loans: Buying Land

  1. Craig Gackowski says:


    I am looking to purchase land for nursery operations. What means would I go about to apply for an FHA loan for this. Thanks.

    • Joe Wallace says:

      FHA home loans are for properties that are primarily residential in nature–only 25% of the total floor space of a property may be used for non-residential purposes. According to FHA rules, “Any nonresidential use of the property shall be subordinate to its residential use and character.”

  2. Kym Licup says:

    My husband & I are interested in buying land which will be residential. However, we will not be able to afford to build on it for the next 2-5 yrs (depending on finances).
    Does FHA have a time limit within which a residence must be built for a FHA land loan?

    thank you for any information!

    • Joe Wallace says:

      Best advice–contact the FHA directly at 1-800 CALL FHA to discuss your specific circumstances as there are many variables that can affect loan approval. For example, if the property is an investment property or a primary residence, etc.

      • Sean says:

        I am wanting to buy a 40 acre piece of property to subdivide into 5 parcels -all of which will be permanent residences. I have buyers for these divisions in place and as soon as the process goes through they can be sold to recoup the money needed for the original loan. Is this something the FHA loans will allow? And if so, can I roll the subdivision costs into the FHA loan? Thanks for the input.

  3. Aleesha says:

    Is the down payment the same for land as it is with purchasing a house using an FHA loan?

  4. Alicia says:


    My husband and I will be building a home, we have land that we are interested in, what is the max for a construction loan and built that FHA gives?

    • Staff Writer says:

      HUD 4000.1 states:

      “The maximum mortgage amount is calculated using the appropriate purchase Loan-to- Value (LTV) percentage of the lesser of the appraised value or the documented Acquisition Cost. The documented Acquisition Cost of the Property includes:

      the builder’s price to build; Borrower-paid extras over and above the contract specifications and/or out-of- pocket expenses not included in the builder’s price to build; cost of the land if already owned, or with an acceptable gift documentation, the appraised value of the land may be used instead of the cost; and closing costs associated with any interim financing of the land.

      If the land is being purchased from the builder, the cost must be included in the builder’s price to build.
      If the Property being constructed is Manufactured Housing, the builder’s price to build shall include the sum of the cost of the unit(s) and all on-site installation costs.”

  5. Casey says:

    Hello. We are newlyweds. I have purchased two houses in my lifetime. One when I was 21 and one when I was 27. The first of those ended up going into foreclosure. After a tough run of losing jobs and losing the house, I ended up renting for a while. Now that we are married and expecting a baby, I am thinking about purchasing again. I had a lot of construction experience and the second house I purchased was an investment home built in 1911 that I refurbished. What I would like to do is purchase a lot and build a small dwelling about 600-900 sq ft. We would live in this until we could afford to build a larger home on the property and then utilize the first structure as a guest house. I am past the 3 years since the foreclosure and my credit score is a bit better despite still showing the foreclosure. It’s around 670. I know FHA wants a licensed contractor to do the work. But I’m trying to get creative because building the guest house myself would save me a ton of money. Are there any options at all for someone who wants an FHA loan to purchase a residential parcel of property, but wants to build themselves. Again, I am willing to get as creative as possible to do this. The only thing I have come up with is, get a land loan and pay interest only until I can complete the construction, but that’s a lot of payments going to nothing and I would have to do the building little
    By little. Time is of the essence due to the baby. I could really use 50k up front to pay for the construction. I appreciate any ideas you guys might have.

    • Staff Writer says:

      FHA loans for the purchase of land and construction are available under the FHA mortgage loan program, but you will need to find a participating lender willing to do the construction loan. FHA loans are for primary residences only and carry an occupancy requirement, so you will need to discuss your circumstances with a loan officer to see what is possible based on your financial goals and your plans for the property.You can fill out an online form at and be put in touch with a loan officer who will discuss your needs.( is a private company, NOT a government agency.)

  6. Samantha Trimble says:

    My husband and I are conditionally approved for FHA loan and recently had appraiser visit the property. She was unable to get into the home with the lock given but reached out to the realtor that she needed to speak to her supervisors regarding the land with the property. This property has a single family home with several outbuildings and 47 acres with it. No where does it specify a limit to the land required for the FHA loan but I would like to know what to expect the appraiser to say regarding the appraisal and our hopes to purchase this home. There is approx 10 acres of land that can be used and the rest is wooded and hillside. Thanks in advance for your knowledge.

    • Staff Writer says:

      In HUD 4000.1 there is a section that covers “excess and surplus land” which states: “excess Land refers to land that is not needed to serve or support the existing improvement. The highest and best use of the Excess Land may or may not be the same as the highest and best use of the improved parcel. Excess Land may have the potential to be sold separately.

      Surplus Land refers to land that is not currently needed to support the existing improvement but cannot be separated from the Property and sold off. Surplus Land does not have an independent highest and best use and may or may not contribute to the value of the improved parcels.”

      But that’s the only reference I personally could find that might address the situation mentioned here. Can’t speculate as to what the appraiser might say since state law, lender standards, and other variables may apply.

      • Mary Goy says:

        The property we are looking at has just under 7 acres with a home, garage and a medium size pole barn on it for just over $109,000.00 is this something we can buy through FHA?

        • Staff Writer says:

          FHA loan rules have special provisions for appraisals on properties with “excess land”. The main issue you may encounter in cases like these, if it is determined that there is excess land with your purchase, is that the appraised value of the property may or may not include valuation for the entire parcel of land, depending on circumstances.

  7. Laura Jordan says:


    Does FHA loans include loans for A construction to permanent mortgage?If so, can the construction be done by a licensed general contractor that does custom builds or does it have to be done by a licensed general contractor that only does spec builds.

    Also, would the build have a minimum and maximum of square footage to qualify? Would the land have minimum and maximum also?
    Is there other criteria’s / inspections that are specific to construction to permanent mortgage that are specific to a FHA loan ?

    • Staff Writer says:

      FHA loan rules in HUD 4000.1 do allow for construction loans. Page 432 states: “The Borrower must have contracted with a builder to construct the improvements. The builder must be a licensed general contractor. The Borrower may act as the general contractor, only if the Borrower is also a licensed general contractor…The Borrower must be purchasing the land at the closing of the construction loan, or have owned the land for six months or less at the date of case number assignment.”

      For the rest of your questions, lender standards will play an important role in loan approval so you will need to discuss what is possible with a given lender as there may be lender-specific requirements in these areas. There are requirements for proposed construction site-built homes and condos which include the following:

      “The Mortgagee must obtain one of the following:

      –copies of the building permit and CO (or equivalent);

      –three inspections (footing, framing and final) performed by an FHA Roster Inspector on form HUD-92051, Compliance Inspection Report (for Modular Housing, footing and final only);

      –three inspections (footing, framing and final) performed by the local authority with jurisdiction over the Property (for Modular Housing, footing and final only); or

      –a 10-year warranty and final inspection issued by the local authority with jurisdiction over the Property or an FHA Roster Inspector.”

  8. alejandra rodriguez says:

    Hi, I’ve been pre-approved for an fha loan and want to know if you can use it to buy land. My plan is to buy the land and pay it as fast as I can and then build a home.
    Thank you in advance.

    • Staff Writer says:

      FHA loan rules don’t seem to address this scenario unless the loan is in conjunction with a construction loan. You’ll need to discuss your specific needs with a participating lender to see what may be possible.

  9. Jason dan says:

    Will the FHA loan cover the purchase of land and construction of a new home? I have found approximately 40 acres and would like to get it and put a new home on it.

    • Staff Writer says:

      Assuming the buyer is financially qualified and there is a participating lender willing to offer the loan, FHA mortgage loans can and do cover the purchase of land for the purpose of a new construction loan. The acreage allowed may depend on a variety of factors including lender standards, so you’ll need to discuss your situation with a loan officer. You can fill out an online form at (a private company, not a government agency) and be put in touch with a participating lender.

  10. Barb Martin says:

    Hello, I am pre-approved for a FHA loan, and lucked into having an estate offered to me before they list with a realtor, at a fantastic price! Problem is, it is 6 acres with an older mobile home……it was built in 1977, so meets the age requirement barely, but I have heard many different explanations as to what qualifies it as “permanent”, or “tied to the land”. It cannot be moved, has had permanent additions on foundations attached, and a complete roof addition over all of it, so certainly cannot be moved, and is in REALLY great condition. However, the title has NOT been retired for it….. So my question is, can this property be financed? One bank says yes, but another 2 said NO WAY, and that if I let the bank that said yes do it, I would pay for inspections etc only to be told no at the closing.??? Worried…..

    • Staff Writer says:

      If the home is not on a permanent foundation, or if the foundation does not meet state/local code requirements, the appraiser would recommend either corrections (if possible or permitted) or the loan would be denied on the basis of the appraisal. Since state/local code issues will affect the outcome, it’s best to see whether the foundation is in code compliance or not based on the local ordinances. An appraisal is required as a part of the FHA loan process, but there is no guarantee that the property will be approved or not-so yes, you will be required to pay for the appraisal regardless of the outcome.

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