5 Ways to Finance a Homestead

5 Ways to Finance Your Homestead. How to finance a homestead. Finance and Own a Homestead.

If you’re reading this article, you’ve likely done extensive research about homesteading and reached one of the biggest hurdles to transitioning to this lifestyle—financing it.

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Becoming self-sufficient can involve more—or less—than organic gardening, raising livestock, and cooking from scratch. Depending on what your homesteading dream entails, your land and material requirements will vary. Thankfully, affording this unique lifestyle does not have to be out of reach, even if you’re broke!

how to finance a homestead, paying for a homestead

Planning a homestead should also include how you will pay for your homestead.

Below I’ve outlined five ways to finance your homestead:

Simplify and Sell What You Have

Depending on how self-reliant you want to be, homesteading can be compared to taking on a full-time job (or a second job, if you are already employed). That doesn’t mean that it is not worth it, but it is important to remember that it can take up quite a bit of your time.

That being said, you want to avoid purchasing things that will not contribute to your new lifestyle, especially if those purchases will require a lot of maintenance that will take you away from your homesteading responsibilities. The less money you spend on things that you don’t really need the more you will be able to save for homesteading essentials.

Additionally, as with any potentially costly new venture, it’s important to make use of what you already have. Likely, if you are considering homesteading you already engage in related activities like hydroponic gardening, canning, or cooking from scratch.

So, you probably own some of the tools and materials you will need to get started. To acquire more essentials, you can sell or trade items that you no longer need. Facebook marketplace, Craigslist, and other online selling platforms are great ways to sell goods you no longer have use for.

​In addition, you can use these sites to trade with others. When trading doesn’t work, you can purchase. These sites can still come in handy because sellers will generally be offering whatever you are looking to purchase for much cheaper than what you would pay in-store.

Purchase Homesteading Land From a Land Bank

Another cost-conscious option for funding your homestead is land bank property.

What is a land bank?

According to the National House Conference, “Land banks are created by local jurisdictions – usually as a public entity but occasionally as an independent nonprofit –to hold abandoned, vacant, and tax-delinquent properties for future development.”

There are several benefits of buying land from a land bank.

The most important one for you as a potential homesteader is that the property tends to be quite affordable. There are also different kinds of land bank properties. Some of them are empty lots, while others are vacant, dilapidated homes that need repairing.

​Typically, these properties are also eligible for traditional mortgages, which can make purchasing them more realistic and manageable.

how to finance a homestead, paying for a homestead

If you don’t presently own a home or don’t have enough land on your current property to live out your homestead dream, as long as you don’t mind putting work into beautifying an existing home or constructing a new one, investing in a land bank property might be the right choice for you.

If you decide to go this route, it’s important that you research local zoning laws, codes, and permits.  If you are interested in raising livestock, you need to find out if you are able to do so on the property that you are interested in purchasing. It’s not as simple as having enough room to raise animals. You’ll need to make sure that you are actually allowed to have farm animals.

If you are interested in buying land bank property in a metropolitan area, you may meet some challenges when it comes to raising livestock.  For example, you may be surprised that many cities will allow you to raise a small flock of hens, quail, or even honeybees.

​That doesn’t mean that your homesteading dream has to die, but you may need to scale it back, modify it or find a new property that will accommodate your needs.

Consider a Personal Loan

If you already own property that would be conducive to homesteading but need money to cover the cost of tools, materials, and other essentials, a personal loan could be extremely helpful.

You may be considering a loan to start a homestead, or wondering how to get a homestead loan. Although there are several loans specifically for farmers and homesteaders, they often come with a list of stipulations, such as having or not having a certain amount of farming experience, limits on how large the land can be, requirements to operate as a business, credit score minimums, and other eligibility terms.

While these loans can be very helpful, if you have trouble meeting some or all of the requirements, you may shy away from applying for them. Luckily, personal loans can be used for just about anything. Because generic personal loans have various uses, eligibility requirements are a bit looser.

Before you apply for a loan of any kind, you should determine how much money you need to borrow.

To do that you’ll need to make a list of everything you’re looking to purchase with the loan. What you need will depend on the scope of your homestead.

​Determine whether you want a garden, livestock, and/or the ability to cook and preserve all of your food. As you do this, recognize that these three practices only scratch the surface of homesteading skills and practices.

how to finance a homestead, paying for a homestead

Once you figure out how self-sufficient you really want to be, then you can come up with a list of necessary homesteading tools and materials. You can always add tools as your homesteading skillset increases.

Sell Your House to Buy A Homestead

Homeowners looking to homestead on their residential property may be at an advantage when it comes to transitioning to this lifestyle. If you live in an area that limits the scope of your homesteading aspirations or simply don’t have the room on your current property to accomplish all that you want to do, selling your home may be the best way to go.

How could you be at an advantage as a current homeowner if I am suggesting that you sell your home as a means of financing your homestead?

Well, depending on what your plans for self-sufficiency are, it may be advantageous to downsize or opt to live tiny. Perhaps you currently own a large house but don’t have a lot of land to live self-sufficiently. Many self-reliant practices are done outside. So, having a huge house and limited landscape may not work in your favor if you’re looking to have an expansive homestead.

The money you earn from selling your current house could be used to purchase a smaller house with more land for homesteading. If you are looking to avoid a homestead financial mortgage altogether, you might consider extreme downsizing by living in a micro-home, RV, van, or even a renovated school bus.

None of these tiny living spaces are eligible for traditional mortgages. Oftentimes people are able to purchase these tiny homes outright or finance them over a much shorter period than a traditional mortgage. Again, the money you earn from selling your current home may be enough to cover the cost of your new tiny living space, leaving ample room to homestead.

Before you make a final decision about selling your home as means of funding your homestead, you need to remember that the amount of money that you get to keep depends on a number of factors, including but not limited to, how much you still owe on the home, your selling price, realtor commission, and location.

​You can calculate how much money you will have leftover after deducting all of these fees by adding up the cost of selling and subtract that amount from the final sale price. If you find that the remainder is less than what you need to finance your homestead, it would be wise to consider a different funding option.

Look for Grants to Start A Homestead

There are a ton of farming grants. Grants are similar to loans with the exception that they don't have to be repaid.  However, like loans, there are certain requirements you must meet in order to qualify for these grants, such as running a for-profit farm business or conducting research. So, if you are interested in homesteading as more than just a lifestyle, it’s worth it to look into these grants.

​If you're looking for more expert tips about homesteading, check out this article- Homesteading 101: Q&A with the Experts.

Here is a list of a few relevant grant programs that you may be able to finance your homestead dreams with:

Take your time and research these programs.

​Seeing so many options can be overwhelming. However, if you take the time to think about the scope of your homestead and why you want to become a homesteader, it will be easier to narrow down which ones are worth exploring more deeply.

After all, many of these programs require a proposal of some sort and other documentation. If you will be applying for more than one grant, you want to make sure you are choosing the ones that you have the best chance of receiving. There’s no need to complicate matters more by investing time and energy into applying for grants that do not fit your needs or that you have a long shot of being awarded.

Despite the potentially heavy legwork of getting started, homesteading can be a very rewarding way of life. It allows you to get back to basics and be self-reliant. If you are seriously considering homesteading, remember that it is a lifestyle, not a trend.

​If you are not sure that you are in it for the long haul, start small to see how you enjoy it before seeking out these weightier financing options. You will save yourself time, money, and headache by doing so. Most importantly, you will enjoy whatever homesteading practices you choose to engage in much more.

​​If you haven't yet, grab your FREE Beginner's Guide to Homesteading to learn how homesteading and a simpler lifestyle can add years to your life! Click here to get your free copy!

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How do you plan to finance and own a homestead? Did you use USDA homestead grants or homestead owner financing? Let me know below!

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Hey, I'm Shelby!

Founder of Garden. Farm. Thrive.

I'm a multigenerational homesteader, former high school and college agriculture teacher, and your guide for embracing a simpler, more traditional lifestyle. Come along as I teach you how to grow your best garden, raise chickens and other livestock, learn traditional skills and create the homesteading haven of your dreams.

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