How Much Land Can You Afford?

Owning your own tract of land is the dream for so many Texans. But land prices — especially in high-value states like Texas — have been on the rise. 

A good rule of thumb is to spend no more than 25 to 30 percent of your income on your land payments each month. You can calculate your ideal payments by taking into consideration your income, the cost of the land (learn more about average prices in Texas below), and size of your down payment. 

Down payments for a tract of land could be between 20 and 50 percent of the total land value, so this is another factor to consider.

Figuring out how much land you can afford shouldn’t be a complete guessing game. You need accurate numbers at your fingertips to assess how realistic your land ownership goals are. 

At Texas Farm Credit, we offer helpful tools and resources to help you estimate land affordability, learn how to afford a farm, and pursue the right financing options to secure your dream. 

With the right information and support, you can take one step closer to land ownership in the Lone Star State.

The cost of buying a farm in Texas 

With Texas adding more residents from 2010 to 2020 than any other state, competition is hot for land. This can often raise prices, and you’ll need a long-term financial strategy to pursue farmland ownership in Texas. However, despite this competition, land in Texas is still cheaper than several other regions in the U.S., including big ag producers like Iowa or California.

How much you’ll pay can vary based on region within the state, tract size, and the type of land (timber forest, acres for row crop production, etc). For example, bottomland hardwood timber acres will likely be cheaper than pasture acres. 

Whether you’re hunting for a tract of land to build your dream home in the bustling Dallas-Fort Worth area, or you want a few acres to cultivate cotton in the High Plains, the viability of that goal will likely depend on affordability. 

Take a look at our latest Texas land pricing guide to get a better idea of land affordability throughout the state. For example, land in the Gulf Coast – Brazos Bottom region can stretch up to almost $10,000 per acre. On the lower end, you could find acres for less than $1,000 each in Far West Texas. 

Depending on your budget and each region’s acreage availability, you’ll have a wide range of options. 

How to afford a farm 

Being able to own and operate a farm will depend on having a solid business plan. Make sure you spend time up front designing a long-term strategy to protect your bottom line. Factor in expected cash flow, expenses, and taxes. Build in some cushion to account for unexpected scenarios, like input shortages, interest rate fluctuations, or changes in trade policy.

Once you’ve developed a business plan, an important step is securing the right financing. Loans are available through organizations like Texas Farm Credit. [Apply here]

To figure out what kind of loan you need for your operation, you’ll want to estimate your land’s profitability. This will help you figure out how long it will take for your operation to break even — and then make enough profit to start paying off your loans. By crunching these numbers on the front end, you can more easily determine how much debt you can take on. 

Profitability can be estimated based on current commodity prices, market conditions, and operating details, such as tillable acres and operating expenses. 

If you expect higher profitability, you can more quickly pay down your loans — and likely afford more land up front. If you estimate lower profitability, it might be best to start out with fewer acres, then work up from there.

Get help from the experts 

If you’re ready to secure financing, reach out to our team here. You can also visit us at your local Texas Farm Credit location to speak with an agent in person.