Land is worth more than houses all the time. Something is strange here. Have you checked with other lenders?

I think you're running into a situation where the lender will not consider the land to house ratio acceptable for a conventional home mortgage. Most lenders don't want a lot of land. You might need to look for a "farm" type loan which deals with these kinds of ratios. You need to talk to other lenders - smaller local institutions (i.e. not the major banks ) might be more willing to work with you. Are you working with a realtor - he/she should be able to help you find a lender that specializes in these types of loans. Or, figure out what the maximum you can borrow (after down payment) and ask the seller to carry a first (promissory note) on the balance needed.

Im thinking duvet is heading in the right direction, I will be looking around more Monday! I know there lots with way more value in land than the home that's why I didn't understand no one would finance me. I will be looking for something in this upcoming week, any recommendations for the Raleigh/NC area? Thank you guys for the help, I'm not trying to give up on this property!

You may want to check Carolina Farm Credit (carolinafarmcredit.com). They do not have a Wake office but they do have one that serves Durham and Orange. It is in Hillsborough. If you read their web site, it makes it sound like they only serve farms/farmers, but as I understand it, they provide loans for anything that counts as a rural home.

"Land is worth more than houses all the time."

Not in any area in which I've bought and sold.

I thought you had lived in the DC area (Northern VA) at one point?

The area is Garner, NC which is a suburb if I recall, would that be an issue for a rural loan?

"I thought you had lived in the DC area (Northern VA) at one point?"

Doh. Yup, and I've lived in the MD suburbs of DC for 26 years. Sure there are "inside the beltway" lots with a lot of value making the homes "tear-down" targets. Certainly not the norm!

Glad to hear your keeping track of my travels. lol

Talk to a different bank. Here in the Boston 'burbs it is very common for any smaller/older house to be worth only a fraction of the value of the lot. A good conforming 1 acre lot will run you around $400 to $450K, some with small houses on them sell for that or less. Never heard of anyone having a problem getting a mortgage, we were in that situation and had no issues-- the question didn't even come up.

If the OP finds a 4 acre lot in Boston,, Seattle, etc, think sub-divide. As I said, "Not in any area in which I've bought and sold." The exception to that is San Diego since I left there. In California in 1976 they passed Prop 13 which restricts the amount property taxes are permitted to be increased. This has created huge disparities in amount paid in tax depending on when home bought. A home not bought recently creates a situation where the property becomes inflated in value as a buyer could buy, tear down, and replace within very strict guidelines as to footprint and other considerations.

The other metropolitan areas that I found where I had lived - or more correctly - in the suburbs of - land value was less than the structure value. (Washington (47%), Seattle (49%), and Hartford (15%). San Diego is 65% but I lived there over 30 years ago and Prop 13 had not yet reached it's current impact. Also, I lived in Seattle area pre-Microsoft and land was dirt cheap at that time.

Don't know why when I cite my experience it needs to be stalked and selectively picked apart. I was simply trying to help by suggesting that my experience suggests, "Not in any area in which I've bought and sold."

Also, generally the farther one goes out in the burbs, generally land cost goes down as well as home cost. Again, generally in my experience.

The only experience I have with this are lot to home values in construction loans. Here, my lot is limited to 30% of total built value. This doesn't mean I can't build a cheaper home, but only 30% of the paid for lot can count towards loan to value.

Since 30% obviously wouldn't work in many cities, I assume these are set regionally. Not sure if there is a similar formula for existing home purchases or not but there could be.

ck out usda loans

In many areas of the country the value of the land far outweighs the value of the dwelling. And in other areas where some builder puts a 4,000 sq ft house on a half acre it doesn't. But that's something I never understood. Why put a McMansion on a postage stamp lot?

I did get a hold of some lenders today and was told I could probably get a loan with 15 to 20 % down. For me I just dont have that much so I might just have to pass this up. I am totally bummed after all this :/

20% down is fairly standard for any real estate transaction. 20% of 130K is only $2600. Add closing costs and you would only need maybe 5 K. You don't have that saved? Perhaps it isn't the right time to be home shopping is what the bank has told you. I agree with the bank.

uhhh....you forgot a zero on that 20% down livewire

Yikes! How ashamed am I! Too late at night following a 14 hour day is my only excuse. I really can do math. I have to for a living. Now I'm going to be paranoid about the work I did last night.

Here is a map which shows the eligible areas for usda loans in garner/around garner. You can put in an exact address to find out for sure if it would be eligible.

http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

Program- http://www.rd.usda.gov/programs-services/single-family-housing-direct-home-loans

No down pmt required.

Sounds like the lack of comparable properties is also an issue, the lender can't establish a reasonable value if there aren't comparable properties. So combine that with excessive land value ....

I hear people say that 20% down is "normal" these days, and I beg to differ. USDA & VA loans are 0% downpayment loans. FHA requires 3.5%, Fannie & Freddie both have 3% downpayment programs.

I work for a community bank and we do tons of loans that have downpayments of less than 20%. There really are MANY different financing options, people just need to either do their research or find a really good loan officer.

I bought a 24 acre lot (no house) in Tennessee for almost 300k with a conventional 15 year loan from Farm Credit. 15% down was required and there was no PMI. I would highly recommend Farm Credit if the property is eligible.