How to buy land to build a house: the steps, in order

The short version

Buying land to build on is two projects: buying the land and making it buildable. The expensive mistakes happen when the second is assumed. Before you close, confirm that you can legally build the house you want, get to it, get water, power and septic or sewer to it, and finance it. Then line up the loan that pays for both the land and the house.

The order that saves money

1. Know what you want to build and your budget for land plus house. Lenders and builders will ask, and it decides which lots work.
2. Talk to a lender early. Find out whether you will use a land loan now and a construction loan later, or a single construction-to-permanent loan that covers both. See land loans compared.
3. Shortlist lots and make the free checks: zoning, flood maps, soil survey, road access on the plat.
4. Make an offer with contingencies for the checks that cost money (perc test, survey, title, permits). See land purchase agreement contingencies.
5. Do the due diligence inside the contingency period. The table below.
6. Close only when every item is confirmed in writing, then design, permit and build.

What to confirm before you close

Check	Where to check	What you are confirming
Zoning and permitted uses	County or city planning office	Whether a house (and its size, setbacks, and any outbuildings) is allowed
Legal access	Deed, plat and title search	A public road frontage or a recorded easement, not just a track
Septic or sewer	County health department or septic permitting office	A passing perc test or soil evaluation, or a sewer connection; the septic approval can limit how many bedrooms the house may have
Water	State well records, neighbours, water utility	Whether a well is likely to work (many states require a permit to drill; well water isn’t federally regulated, so test it), or public water is available
Power and other utilities	The electric co-op or utility	How far the nearest line is and what extending it costs
Flood zone and wetlands	FEMA Flood Map Service Center; wetlands maps	Where you can build; once a loan is secured by a house, including one being built, a regulated lender will require flood insurance in a high-risk flood zone; filling wetlands can need a federal permit
Boundaries	A licensed surveyor	That the lines, corners and acreage match what you think you are buying
Title, covenants and HOA rules	Title company	Liens, easements, deed restrictions and building rules; whether water, mineral or other rights were severed and don’t come with the land; and that the seller really is the owner
Building permit rules	County building department	What it takes to get a permit for your house on this lot

Each of these has its own guide on our due diligence checklist, including perc tests, access and mineral rights.

Paying for land and house

• Two loans: a land loan now and a construction loan when you are ready to build, then a mortgage. More closings and more paperwork, but usually no lender deadline to build (check the loan terms and any covenants).
• One loan (construction-to-permanent): finances the land, the build and the final mortgage in one closing. Usually requires a builder and plans at the start.
• Cash for the land, then a construction loan that can count the land you own as equity toward the down payment.

Government-backed home loans generally won’t pay for vacant land on its own, but some can cover land bought together with building the house. Our post on USDA and VA loans for land covers the details.

Watch for fake sellers

Vacant land is a favourite target for impostor scams: someone posing as the owner lists the lot cheap, often “for sale by owner”, and pushes for a fast cash closing. Use a title company or attorney to close, and have them verify the seller’s identity against the recorded owner before any money moves.

Costs buyers forget

Beyond the price of the land: the survey, the soil test, the driveway, clearing, a well or water hookup, septic, bringing power in, permits and impact fees. On a rural lot these can add up to a large share of the land price. Get rough quotes during the contingency period, and use our holding cost calculator for what the land costs you each year before you build.

Quick answers

What should I check before buying land to build a house?

Zoning, legal access, septic or sewer, water, power, flood zone and wetlands, boundaries, title and covenants, and what it takes to get a building permit. Make the purchase contingent on the checks that cost money.

Can I get one loan for land and construction?

Often yes: a construction-to-permanent loan finances the land, the build and the final mortgage with one closing. It usually requires a builder and plans up front.

Should I buy land before finding a builder?

You can, but talk to a builder and a lender before you close: they can spot lots that would be expensive to build on and tell you how the land affects financing.

How do I know if a lot is buildable?

Confirm zoning allows a house, there is legal access, the soil passes a septic test (or sewer is available), water and power can reach it, and the building department will issue a permit.

General information, not legal, tax or financial advice. Land rules differ by state and county; confirm with the county health or planning department, a real estate attorney or a licensed professional before you buy.