Everything You Need to Know About Getting a Land Loan in New Hampshire

If you’ve found the perfect plot of land in New Hampshire to build your dream home, a land loan can help make it a reality. Financing raw land for future construction or a vacation property can be tricky, but New Hampshire lenders offer land loans with competitive rates and terms.

As lifelong New Hampshire residents we’ve helped many local buyers fund land purchases over the years. In this comprehensive guide, we’ll explain how land loans work what’s required to qualify, and provide tips for securing the best financing. Whether you want to build your forever home or a lakeside cabin, read on to learn if a New Hampshire land loan is right for you.

What is a Land Loan Exactly?

A land loan is a mortgage specifically for financing vacant land without existing structures Traditional mortgages require a dwelling, so land loans fill that gap by providing financing to

• Purchase a vacant lot for future construction
• Buy recreational land for camping and outdoor activities
• Build a vacation home or cabin on rural land

Land loans function like other mortgages with similar terms and interest rates. The main difference is they are secured by the land as collateral instead of a residential property.

In New Hampshire, land loans are commonly used to purchase acreage for eventual construction of a primary residence or seasonal getaway. The land serves as the security allowing borrowers to lock in low rates and spread out payments over time.

Common Uses for New Hampshire Land Loans

There are many reasons New Hampshire residents take out a land loan:

To Build a Primary Home – Buying land with plans to construct a home within 5 years or less is a prime use case. The land loan provides financing until you’re ready to build.

For a Vacation Property – Land loans allow you to buy a desirable lot while saving up for eventual construction of a vacation home or cabin.

For Camping & Recreation – Those looking for rural land with lakes or trails can use a land loan to buy acreage for camping, hunting, recreation, and outdoor activities.

To Hold & Sell Later – Some may wish to purchase land as an investment, holding it for later sale for a profit when values increase.

No matter your plans for the land, a land loan makes ownership attainable and affordable.

Land Loan Requirements & Qualification Tips

While land loan qualification is similar to other mortgages, here are some top tips for smooth approval:

• Credit score: A minimum of 620 is recommended for the best rates and approval odds. Scores below 600 may face challenges.

• Downpayment: Expect around 20% down required. Higher downpayments improve approval chances.

• Debt-to-income ratio: Lenders prefer no more than 43% DTI to qualify. Lower is better.

• Loan purpose: Detail plans for the land and any future construction timelines.

• Income/Financials: Provide tax returns, W2’s, and payroll docs. Solid income is key.

• Collateral land: Must be suitable for future building with access to utilities.

Meeting standard mortgage requirements proves you can handle the repayment. We’ll highlight top New Hampshire lender options next.

Finding the Best New Hampshire Land Loan Lenders

Not all mortgage lenders offer land loans. Local banks and credit unions are good options worth considering first:

• Members First Credit Union – Offers up to 70% LTV land loans for NH properties. Flexible terms. Local servicing.

• Holy Rosary Credit Union – Competitive fixed rates and 10-year terms for vacant land financing in NH.

• Bank of New Hampshire – Offers land loans for future construction and vacation properties. Up to 15-year terms.

• Northeast Credit Union – Financing available for buying land for primary or secondary homes.

• Service Credit Union – Serves all NH counties with land loans for future residential construction.

Compare interest rates, fees, terms, and credit score requirements from multiple lender sources. Aim for the best fit for your financial situation.

What is the Process for Getting Approved?

Follow these steps when seeking a New Hampshire land loan:

• Check credit reports and scores from all three bureaus.
• Calculate the downpayment amount you can provide. 20% is typical.
• Research land values to estimate the loan amount needed.
• Determine the ideal loan term that fits your budget – often 10 or 15 years.
• Gather tax returns, bank statements, W2’s, and income verification docs.
• Connect with lenders to complete a loan application and get pre-approved.
• Make an offer and move forward once pre-approved!

Give yourself plenty of time as approval can take 30-45 days once you provide all required documentation. Rates and terms are locked once approved.

What Should You Look For in Land?

Not all land parcels will qualify for financing. The property needs to meet these common requirements:

• Zoned for residential use by the town/city.
• Land with road access and proximity to utilities.
• Property with proper permitting for septic system.
• Land that fits loan use – buildable for home or suitable for recreation.
• No major site restrictions like wetlands, steep slopes, etc.
• Survey/appraisal showing defined boundaries.

Location and amenities around the land should fit your goals too. Ensure the parcel matches your vision before purchasing.

What are Current Land Loan Rates in New Hampshire?

Land loan rates are comparable to traditional mortgage rates. Here are sample ranges:

10-year fixed – 5.25% to 6.25%

15-year fixed – 5.50% to 6.50%

20-year fixed – 5.75% to 6.75%

Adjustable Rate – Starting around 5.0%

Actual rate depends on credit score, loan amount, income, collateral land value, and other qualifications. Get multiple lender quotes to find the most competitive rate.

What Closing Costs Are Involved?

Typical New Hampshire land loan closing costs include:

• Origination fee of 1% to 2% of loan amount
• Appraisal fee of $400-$600
• Credit report fee of $50-$75
• Attorney fees for document preparation
• Recording fees for land title filing
• Prepaid property taxes and home insurance
• Survey cost if lender requires an updated one

Closing costs generally run $2,500 to $5,000. Work with your lender to estimate total fees. Ask about options to have any costs rolled into the loan amount.

Alternatives to Land Loans

If you can’t qualify for a mortgage land loan, other options include:

• Paying 100% cash if you have funds available.
• Seller financing when the seller holds a private land contract.
• Secured personal loans using collateral other than the land.
• Pooling funds with family members to split purchase costs.
• Crowdfunding or private money loans from accredited investors.

These may be more costly or restrictive than a traditional land loan, but are worth considering if needed.

The Bottom Line

Purchasing vacant land for future construction or recreation in New Hampshire is made easier with a land loan tailored for this purpose. By following mortgage qualification standards and working with local lenders, you can make owning that perfect lot attainable.

Just be sure to research land carefully, get pre-approved, and find the best rates. With proper planning and financing, you’ll be well on your way to enjoying and eventually building on the land you’ve always wanted!