When opting for seller financing, the requirements to obtain a loan for buying vacant land depend on the seller's criteria and usually include a mortgage on the land, good credit and proof of the capacity to repay the loan, states Nolo. A traditional bank loan for a land purchase requires adequate income to pay for the loan interest, great credit, a sound plan for repaying the loan and an appraised market value exceeding the loan's principal amount.Continue Reading
An equity loan is a good option for prospective land buyers who have accumulated enough equity, according to Nolo. Banks impose less requirements to homeowners with sufficient equity because the homeowners have already proven their creditworthiness and appraised their current home's value. The usual requirements for obtaining an equity loan include an update of a loan applicant's credit and income documents, such as tax returns and W-2 statements.
Sellers who agree to finance a buyer's land purchase may ask for documents related to the buyer's credit history, credit scores and recommendation letters from banks or other lenders, explains Nolo. Seek help from a lawyer when buying real estate and obtaining a loan to ensure the terms and conditions are properly stated and recorded. When applying for a traditional bank loan, the bank may ask for income documentation that complies with its income-to-loan ratio.Learn more about Personal Loans