Finally there is bank financing. If you are going to be financing a land purchase through a bank, you will need to have a lot of information in order before approaching the bank. Many banks will want to see a plan for what you plan to do with the land, soil sample tests, zoning restrictions etc. before they will even look at financing you.
When looking to a bank for financing, you need to look local. Large national banks have little interest in financing the purchase of your ½ acre city lot to build your home. They deal primarily with mortgaging existing homes. Small local banks, on the other hand, usually have a vested interest in the community that they serve. Therefore, as long as you have all the required information, they are more willing to help.
Bank financing will require a larger down payment than the other options we discussed, anywhere from 20-50%. They will also likely have higher interest rates as well because financing a land purchase poses a higher risk to the bank. Often they will finance the land under the condition that you plan to build a home on the property within a set amount of time and often they will provide you with a construction loan as well if you ask for it and have the credit to justify it. Once your construction is completed, everything will be rolled into a traditional mortgage at a lower interest rate. It also helps if you already do business with that specific bank. That way they will be able to see that you are a loyal customer with a good track record and often a bank manager will give you the loan if they know you will keep doing business with them in the future.
While cash is king when financing a land purchase, there are plenty of options out there, you just have to be willing to do some research and have patience.