How to Finance Your Homestead (2024)

Are you ready to buy land, get animals, and garden, but you don’t know how to finance your homestead?

Most families that go into homesteading do it to help their families become more self-reliant, so the idea of a mortgage can feel counterproductive. However, depending on where you live, several loan programs can help you make your dreams come true when you’re wondering how to finance your homestead.

Even better? With the right plan, you can start a business (or two) to lower your overall costs and make your homestead fund itself.

Estimated reading time: 6 minutes

How to get financing to buy a homestead

Homestead financing can be tricky. Lenders may want to look at more than the typical 3Cs - capital, character, and capacity. This is especially true with an older, farmhouse style home.

Home loan options

A traditional mortgage is the most popular way to fund a homestead. And for some people, this is the fastest way to get funding for your homestead. Other than saving your money, that is, which can often take years.

However, the types of mortgages you qualify for when buying a homestead differ from a house in the city.

USDA Home Loan for Homesteads

Depending on the type of homestead you’re interested in buying in the United States, you may qualify for a USDA home loan.

These loans could help you if you have less than-perfect credit and no money to saved for a downpayment. This option is simple and was designed primarily to help develop rural communities.

You do not need a stellar credit score or even a down payment to qualify for a USDA homestead mortgage. Yet you do need to have a good total debt to income ratio.

FHA Loans for Homesteading

An FHA loan is another government-backed home loan program that helps those with a low credit score get a home loan for homesteading with a low down payment. This makes it a suitable option for those of you just getting started homesteading.

If you are homesteading after military service, you can take advantage of a VA-backed loan to start your homestead. These loans do not need a down payment and can usually get you a fairly decent interest rate.

Owner financed

Getting a mortgage is not the only option for buying your new homestead. If you get lucky, you may find a homeowner willing to finance a land contract.

Owner financing could be a helpful alternative when you’re wondering how to finance your homestead.

A vendor takeback mortgage or owner financing could allow you to find a homestead more quickly. This way, you could tackle your homestead projects without having to qualify for a traditional loan.

And if you're looking at buying an off grid home, this might be your only option - other than tapping into your savings account, that is.

How to get a deal on your homestead

One part of funding your homestead is to lower the overall cost by shopping smartly for the land.

Look for cheap land from foreclosures, estate auctions, and other programs where land may get offered for sale well under its market value.

Talk to friends and family in the area you're interested in. They may know of someone willing to sell land privately. These deals can help you get more land for your homestead without spending more money.

Keep an eye out for these land auctions while you're looking for homestead land. Many areas have a department that lists land the government owns and sells for taxes, making this a great place to start. Do a simple Google search for your area.

Make your homestead pay for itself

When buying a homestead, look for potential moneymaking opportunities right there. That way, your homestead can pay for itself.

Get creative when looking for ways to finance your homestead FROM your homestead.

Rent Out Billboard Space

For example, do you have highway frontage? Try renting space to a billboard company.

Rent Out Pastureland

What about unused pastureland? Rent it to a neighboring farmer with cows, pigs, or sheep. After all, the less work involved for you the better.

Rent Out Storage on Large Acreage

If you have enough land, you could possibly rent space for Conex boxes for storage. Depending on zoning in the area, you might even find you could set up a campground for traditional camping or RV parking.

Get Goats

As you build your homestead, constantly look for ways to make money from your homestead. If you have a lot of space with vegetation, consider getting goats to help clear it out. Then rent the goats out to others looking to clear and vegetation with very little work.

This is an increasingly popular way to become more financially self-reliant and to make an income on a homestead.

If one or two of those goats are lactating, consider selling that supply of goat milk. Make goat milk soaps or cheese to help finance your homestead.

Open a Pick Your Own Farm

Another creative, relatively passive income source for homesteads to help pay a mortgage loan is put in a large field of “pick your own” plants.

Choose a perennial crop like strawberries that can be planted once and continue to come back year after year. These beds will produce fruit every year.

Or try a pumpkin patch and offer hayrides as well.

Then you can invite people to come in and pick by the pound or bucket to make money off the fruit or vegetables without having to pick it yourself. At the same time, you’ll be helping families enjoy outdoor time together while making money on the side to finance your homestead.

There are other options for getting money to buy a homestead.

Depending on your situation, you could refinance an existing property to borrow against the equity and buy rural property. You might have access to unsecured credit. Or you could explore a rent-to-own option.

Whatever the situation, do your homework before signing anything. Talk to your financial advisor and/or lawyer.