How to Buy Land and Build a House: A Practical 5 Step Guide 

Key takeaways: 

• 5 steps: Buy land, prepare, finance, build, and close.
• Pros and cons: Full control and customization, but higher costs and longer timelines.
• Keys to success: Check zoning, secure financing, hire professionals, and budget for delays.

Many people dream of building a home from the ground up, whether it’s purchasing land in Concord, New Hampshire, or finding a lot near Spokane, Washington. No matter the location, the process begins long before construction; it starts with buying the right piece of land. While the idea of creating a custom home is exciting, buying land and building requires careful research, financing, and step-by-step planning to make sure everything goes smoothly. In this Redfin article, we will cover how to buy land and build a house in five steps, from finding the right property to closing, building, and moving into your new home.

Is buying land and building right for you? Pros and Cons

If customization and location flexibility are top priorities, building can be worth it. If you need speed, simplicity, or a lower upfront cost, buying an existing home is often the better fit.

Pros

• Design freedom: You have the freedom to customize the home exactly how you want, from the layout to the finishes, rather than working within someone else’s design.
• Flexible location: Buying land opens up more choices. You can build in a rural area, a suburban neighborhood, or on the edge of a growing city.
• Lower early maintenance: A brand-new home typically requires less maintenance in the first few years compared to an older resale property.
• Potential builder warranties: Many builders offer warranties that cover certain repairs or structural issues, giving you added peace of mind.

Cons

• Higher costs: Between land, permits, construction, and unexpected expenses, the total can be more than purchasing an existing home.
• Longer timelines: Building a home often takes months or over a year, so it’s not the best option if you need to move quickly.
• More complex process: From financing land to working with contractors, there are more moving parts than a standard home purchase.
• Potential frustrations: Delays, weather issues, or construction setbacks are common and can test your patience.

Step 1: Buying the land

Quick summary: Find the right property, confirm it’s buildable, secure financing, and close.

1. Where to find land

The first step is finding available parcels of land that fit your needs. You can use Redfin and filter your search specifically for land sales, which makes it easier to narrow down options that meet your criteria. It’s also smart to work with a real estate agent who has experience in land transactions, since they’ll understand the unique challenges that come with evaluating and negotiating land deals.

2. Zoning and restrictions

Before you buy, make sure the land is zoned for residential use and not limited to agricultural, commercial, or mixed-use purposes. Local rules may also include setbacks (how far your home must be from property lines), easements (whether others have legal access to cross your land), and view ordinances that could limit additions like a second story. If the land is in a neighborhood or subdivision, check for HOA restrictions that might affect the type of home you can build.

3. Visit and evaluate the property

Photos and listings only go so far, visiting in person is essential. Look at the availability of utility hookups such as electricity, water, sewer or septic, and even internet access. Consider the slope and soil quality, which affect construction costs and drainage. Verify street access, since landlocked parcels without a road connection may require costly easements. Also, think about everyday factors like commute times, proximity to schools, and whether nearby development could impact your property’s future value.

4. Land survey and soil test

A professional land survey confirms the exact property boundaries and can protect you from disputes with neighbors. A soil test evaluates the ground’s stability and drainage, ensuring the land is suitable for building and can support foundations, septic systems, or other required infrastructure.

5. Title search and ownership

Before closing, a title search will uncover any liens, unpaid taxes, or encumbrances tied to the land. Confirming clean ownership ensures that you’ll hold the property free and clear once the sale is finalized.

6. Financing options for land

Financing land is different from financing a traditional home purchase. Options include:

• Land loans: These come in three types, raw land (undeveloped), unimproved land (partially developed), and improved land (with access to utilities and roads).
• Construction loans: These short-term loans can cover both the land purchase and the cost of building, and are usually converted into a permanent mortgage after the home is complete.
• Alternative financing: Some buyers explore personal loans, land contracts (direct agreements with the seller), or pay in cash.

Keep in mind that lenders see land loans as riskier, so they often require higher down payments (usually 20% or more) and interest rates that are above standard mortgage rates.

7. Make an offer and close

Once you’ve done your due diligence, you can make an offer on the land. Your real estate agent can help with pricing, negotiations, and including protective clauses in the contract. If financing, an appraisal may be required by your lender. At closing, you’ll finalize financing, transfer ownership, and ensure all legal paperwork is in order. Working with professionals like an attorney and title company helps protect your investment and prevents costly mistakes.

Step 2: Preparing to build

Quick summary: Preparing to build means assembling the right team, securing permits, and budgeting for site prep so construction can start smoothly.

Who to consult before buying land

Before committing to a property, it helps to bring in professionals who can spot potential issues early.

• Builder: Provides a realistic estimate of construction costs.
• Land surveyor: Confirms property boundaries and identifies terrain challenges.
• Attorney: Reviews zoning rules and contracts.
• Real estate agent: Guides you through negotiations and paperwork, especially if experienced with land transactions.

Who to hire when building

Once the land purchase is complete, you’ll need a team to bring your vision to life.

• Architect: Designs custom plans or adapts pre-designed layouts to fit your lot.
• General contractor: Oversees construction and coordinates with engineers for structural and utility systems.
• Inspectors: Ensure the build meets code requirements and passes all necessary checks.

Designing your home and getting permits

At this stage, you’ll decide between using pre-designed floor plans (often faster and more affordable) or creating a fully custom design with an architect. Either way, permits are essential before work can begin. Depending on your location, you may need building, electrical, plumbing, and environmental permits. Your builder or contractor can usually help secure these approvals.

Budget for land prep

Raw land often needs additional work before construction starts. This can include clearing trees or debris, grading the site for drainage, and removing rocks or obstacles. You’ll also need to budget for utility connections, such as water, sewer or septic systems, electricity, and internet. Clearing, grading, and utility hookups can range from a few thousand to tens of thousands depending on site condition and proximity to infrastructure.

Step 3: Financing the build

Quick summary: Financing a new build often requires a short-term construction loan that converts to a mortgage. Expect stricter credit and down payment requirements, and always budget extra for unexpected costs.

How construction loans work

Most people use a construction loan to cover the cost of building a home. These loans are short-term and often come with variable interest rates. The money is released in stages, called “draws,” as different phases of the project are completed. Once the house is finished, the loan is converted into a permanent mortgage that you’ll repay over time.

Permanent mortgage options after construction

When your construction loan ends, you’ll roll it into a long-term mortgage. This works just like a traditional home loan, with monthly payments based on either a fixed or adjustable interest rate. Choosing the right option will depend on your budget and how long you plan to stay in the home.

Higher credit and down payment requirements

Construction loans are considered riskier for lenders, so the requirements are stricter. You’ll often need a higher credit score to qualify, along with a larger down payment. Lenders also require detailed building plans and a construction timeline before approving the loan.

Importance of budgeting for unexpected costs

Even with careful planning, building costs can change. Delays, rising material prices, or land challenges can push your budget higher than expected. Plan for 10–15% over your estimate to cover delays or cost spikes.

Step 4: Construction process

Quick summary: The construction process starts with site prep, moves through key phases like foundation, framing, and finishes, and requires inspections at each stage to keep the project safe and on track.

Site prep

Before building begins, the land needs to be prepared. This usually includes clearing trees or debris, grading the land for proper drainage, and installing utilities such as water, sewer or septic systems, and electricity. Preparing the site ensures that construction can move forward safely and smoothly.

Major phases

A new construction of a home typically follows a set order:

1. Foundation: Pouring the slab or building the basement/footings.
2. Framing: Putting up the walls, floors, and roof structure.
3. Roofing: Installing shingles or other roofing materials.
4. Plumbing and electrical: Running pipes, wiring, and HVAC systems.
5. Insulation: Adding insulation to regulate temperature and improve energy efficiency.
6. Interior finishes: Drywall, flooring, cabinets, paint, and final details.

Each phase builds on the last, moving the project closer to completion.

Required inspections

At several points in the process, the city or county will perform inspections. These checks confirm that the work meets building codes and safety standards. Inspectors typically sign off after the foundation, framing, electrical, plumbing, and final finishes are complete. Passing each inspection is required before construction can continue to the next stage.

Step 5: Closing and moving In

Before you can move in, your home must pass a final inspection and receive a certificate of occupancy, confirming it’s safe to live in. If you used a construction loan, this is when it’s converted into a permanent mortgage. The last step is completing any landscaping and finishing touches, so your new home is fully ready to enjoy.

FAQs about buying land to build

1. Do I need a real estate agent to buy land?

You’re not required to use an agent, but it’s highly recommended. An agent with land experience can help you find listings, review zoning rules, and negotiate terms.

2. Can I finance both the land purchase and construction together?

Yes. A construction loan can cover both the cost of the land and building the home, then convert into a permanent mortgage after construction is complete.

3. How much does it cost to buy land and build a home?

Costs vary by location, size, and design. Buying land can range from thousands to hundreds of thousands of dollars, and the average new home in the U.S. costs several hundred thousand dollars to build. Always budget for land prep and unexpected expenses.

4. What’s the timeline to build a house from scratch?

On average, building a home takes 6 months to over a year. The exact timeline depends on the size of the home, local permits, weather, and construction delays.

5. What types of land loans are available?

There are three main types: raw land loans (undeveloped), unimproved land loans (partially developed), and improved land loans (with roads and utilities).

6. What permits are required before building?

Most areas require building, electrical, plumbing, and environmental permits. Your builder or contractor can help you secure them.

7. Can I build on any piece of land I buy?

No. Zoning laws, soil quality, setbacks, and utility access all determine if a property is buildable.

8. Do I need a soil test or land survey?

Yes. A soil test confirms the land can support a foundation and septic system, and a survey verifies boundaries to prevent disputes.

9. What’s the minimum down payment for a construction loan?

Most lenders require at least 20% down, and some may ask for more depending on credit and land type.

10. Is building a home cheaper than buying one?

Not usually. Building often costs more than purchasing an existing home, but it gives you full customization and new construction benefits.

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