A Guide to First-Time Rural Property Buyer Programs, Loans, and Grants

A Guide to First-Time Rural Property Buyer Programs, Loans, and Grants

Known as The Dairy State, Wisconsin has a long-standing reputation as one of the biggest agricultural producers in the country. With its abundance of quality soil, there are over 64,000 working farms. Vast open spaces lend to incredible deer and turkey hunting in the northern portion of the state, and dense forest areas present lucrative opportunities for timber investment.

While a first-time home buyer in Wisconsin might find the idea of purchasing rural property exciting, there are several things to consider before taking the plunge. Buying rural property is vastly different than securing financing for a primary residence, and a land loan can often be harder to obtain. Learning about rural buyer programs, loans, and grants may be a good idea. Whether you are interested in taking over a dairy farm, getting involved in hobby farming, looking for recreational land, or wanting to invest, there are plenty of rural properties to choose from throughout Wisconsin.

Median home price in Wisconsin

According to the Wisconsin Realtors Association, as of May 2023, the median home price in the state was $294,000, representing a 5.45% increase over the same period last year. This is still considerably lower than the national average median home price of $436,800.

Buying rural property in Wisconsin

Rural properties have a broader price range that varies significantly depending on many different factors, which can include the following.

  • The bare dirt value.
  • Location.
  • Current market conditions.
  • Income-producing potential.
  • Soil quality.
  • Development potential.
  • Natural resource features (crops, timber, etc.).
  • Outbuildings on the property.
  • Water features (rivers, creeks, ponds, etc.).
  • Managed hunting grounds.
  • Proximity to timber mills.
  • Ease of access.
  • Expected yields of farming land.
According to a 2022 End of Year Report from the University of Wisconsin-Madison, "The average price of agricultural land sold in Wisconsin between January and December 31st, 2022, was $5,551 per acre." This was revealed to be "an 11.3% increase from 2021 and a 23.5% increase from 2020."

As the demand for rural property in Wisconsin continues to grow, interest rates have steadily increased over the past year due to adjustments made by the Federal Reserve. Farmers and bankers alike are waiting to see the results of this year's crops and commodity prices to determine how the market will look in 2024.

Finding the rural property for you

A first-time home buyer in Wisconsin looking for a rural property must determine how they want to use the land by considering the following:

  • Location: This is the most essential aspect of your deal.
  • Zoning: Check city, state, and county zoning ordinances to make sure the land meets your needs.
  • Environmental concerns: Inspect the soil condition, topography, and any restrictions pertaining to fauna and flora removal.
  • Road access: Determine the access rights before making an offer to ensure you will not have to trespass on private property to get to your land.
  • Legal claims: Verify that the property is free and clear of liens or other legal claims.
  • Consult with a builder: Make sure the lot meets your plans for elevation changes, use of space, etc.

Loan programs for a first-time home buyer in Wisconsin

Conventional loans

  • Conventional 97: This is a loan from servicers such as Fannie Mae or Freddie Mac that requires a 620 minimum credit score and a 3% down payment. Mortgage insurance is typically only necessary for the first few years.

  • Federal Housing Administration (FHA): This is a loan backed by the FHA. Applicants need a 580 minimum credit score and a 3.5% down payment. Mortgage insurance premiums are required until the mortgage is refinanced or paid in full.

VA loan from the U.S. Department of Veterans Affairs

To qualify for a VA loan from the U.S. Department of Veterans Affairs, an applicant must meet the following eligibility criteria:

  • Veteran.
  • Active military member.
  • Reservist.
  • Member of the National Guard.
A minimum credit score of 620 is required. No down payment is needed, and mortgage insurance is not necessary after the loan closes. This type of loan offers significant advantages to qualified applicants.

U.S. Department of Agriculture (USDA) Rural Development

A USDA loan is designed for applicants of low to moderate income levels attempting to purchase rural property in designated areas. The benefits of this type of loan include:

  • Zero down payment.
  • A minimum credit score of 640.
  • Low mortgage insurance rates.
The USDA also offers buyer grant programs for specific areas of economic development. Consult with a reputable financial advisor to determine eligibility.

Wisconsin Housing and Economic Development Authority (WHEDA)

Loan programs

The WHEDA state-sponsored buyer program is exclusive to purchasing a primary residence and cannot be used for investment properties or a second vacation home. All applicants must complete a home buyer education program. Financial assistance includes the following:

  • WHEDA Advantage Conventional: This is similar to the rules of a Fannie Mae conventional loan. It is a 30-year fixed-rate mortgage for purchasing or financing a single-family residence, manufactured home, condominium, or multi-family dwelling. A minimum credit score of 620 is needed.

  • WHEDA Advantage FHA: Backed by FHA, this 30-year fixed-rate mortgage requires a 640 minimum credit score. It only applies to the purchase of a single-family home, HUD-approved condo, or two-unit property.
While these loans are not specific to rural land, you may be eligible to apply if there is a primary residence on the property.

First-time home buyer grants

WHEDA offers financial assistance in the form of a second mortgage, instead of a grant, to cover down payments and closing costs. The two down payment assistance (DPA) programs include:

  • WHEDA Easy Close DPA: This is a 10-year, fixed-rate loan between $1,000 and 6% of the purchase price. The rate is the same as the first mortgage and requires monthly payments.

  • WHEDA Capital Access DPA: This 30-year loan is between $3,050 and 3% of the home's purchase price, with no monthly payments and a 0% interest rate. The amount gets repaid when the property is sold or refinanced.

How a land loan differs from a traditional mortgage loan

Most banks require a down payment of at least 10% for a land loan and will usually only extend the term for 15 years compared to the 30 years offered with traditional mortgages.

A lender will assess the property value and examine your financial records to determine your eligibility. The interest rate may be slightly higher than conventional loans.

Adding land as an investment strategy

Purchasing vacant rural land in Wisconsin can be a great opportunity with significant financial gains. While investors can make a profit on valuable acreage, it can be a complex process. Investing in land requires patience, research, and the knowledge to determine if a property holds its value while meeting your needs.

Contact Land & Legacy Group to learn more about purchasing rural properties in Wisconsin

Land & Legacy Group specializes in listing rural properties throughout Wisconsin. We can help you gain exclusive access to local property searches, guiding you every step of the way. Contact us today to learn how our experienced team can help first-time homebuyers in Wisconsin find success.


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