Buying land in Montrose is exciting, but financing dirt is not the same as financing a house. Lenders look closely at water, wastewater, and utilities before they say yes. If you understand how wells, septic systems, and power tie into underwriting, you can budget smartly and avoid delays.
In this guide, you’ll learn what lenders expect, typical costs and timelines, and the local steps that keep a land deal financeable in Montrose County. Let’s dive in.
How land financing works in Montrose
Lenders treat land in three buckets: raw, unimproved, and improved. The more utilities and access a lot has, the easier and cheaper it is to finance. Expect higher down payments and rates for raw land compared with a home mortgage. Industry summaries show land loans often require larger down payments and stronger credit than traditional mortgages. Bankrate’s overview of land loans explains these differences clearly.
If you plan to build soon, a construction or construction-to-permanent loan can be efficient. Lenders usually require plans, a qualified builder, and an appraisal of the completed home. Many programs expect 20 percent or more equity. Learn the basics in Bankrate’s construction-to-perm guide.
Lenders and appraisers must also confirm that utilities meet community standards. If public water or sewer are not available, a viable private well and septic are acceptable when properly permitted and documented. Appraisers are required to describe site utilities and any market resistance. See the utility and site requirements in the Fannie Mae Selling Guide.
Wells: permits, testing, costs and lender needs
Colorado’s Division of Water Resources (DWR) regulates well permits. A complete well permit application typically takes weeks to review, and DWR notes reviews may take up to about 49 days. Start early using the DWR tools and coordinate with the county. You can start here: Colorado DWR well permitting and Montrose County Planning & Development.
Colorado follows prior-appropriation water law, so the legal right to use groundwater matters. DWR provides background on how rights are administered. When a parcel relies on a private or shared well, it is wise to obtain clear documentation through the DWR process before closing.
Private wells are not covered by the federal Safe Drinking Water Act. You are responsible for water testing and safety. Federal guidance recommends annual testing for basics like total coliform bacteria and nitrates, with additional tests if local conditions warrant. Review the EPA’s private well guidance, and plan to share lab results with your lender if required.
Costs vary by geology and depth. Colorado drilling averages often range about 25 to 65 dollars per foot, and complete residential wells can run from a few thousand dollars to 15,000 dollars or more, plus pump, electrical, and testing. Get local bids for accuracy. See ballpark ranges at HomeGuide’s well drilling cost page.
Lenders and appraisers will look for legal ownership or enforceable access to the well, proof the source is viable, and acceptable separation from septic components. These items affect mortgage eligibility, so gather documents early. The Fannie Mae guide describes how appraisers must evaluate site utilities.
Action steps for wells
- Ask the seller for the well permit number and construction records. Confirm details through the DWR search tools.
- Order a certified water test from a state-certified lab following the EPA’s private well guidance.
- If the well is shared or off-site, record a legal access and maintenance agreement before closing.
Septic systems: rules, permits, inspections and costs
Onsite wastewater treatment systems in Colorado are regulated under CDPHE Regulation 43, and Montrose County handles review and approval for most residential systems. Start with CDPHE’s overview of OWTS rules and coordinate permits through Montrose County Planning & Development.
A typical process includes a site and soil evaluation, a county permit application, an engineered design if needed, installation by a qualified installer, and inspections. Timelines vary based on soil conditions and inspector availability.
Costs depend on soil, design, and system type. Colorado ranges commonly show conventional installs from roughly 4,000 to 15,000 dollars or more, with engineered or advanced systems higher. For a useful range summary, see Angi’s septic cost guide.
Many lenders require a septic functionality inspection for property transfers when septic is the primary wastewater solution. If a system is failing, plan on repairs or replacement before closing.
Action steps for septic
- Request septic permits, design, and pump records from the seller.
- Commission an independent functionality inspection during your due diligence.
- If no system exists, complete a soil evaluation and confirm county requirements before you close.
Power, gas, internet and sewer
Electricity is typically provided by Delta‑Montrose Electric Association. If the nearest line is far, you may need a line-extension agreement that adds time and cost. Contact DMEA early for a service and extension estimate. Learn more on the DMEA website.
Natural gas service is location dependent. Where mains are not nearby, utilities may require a construction agreement, and costs vary with distance and site conditions. If gas is not feasible, consider electric or propane strategies.
Internet in many parts of Montrose is improving. Elevate Internet, operated by DMEA, continues fiber buildout in the region. Confirm availability for your specific parcel and coordinate trenching with other utilities when possible.
Sewer service is offered in city areas and some sanitation districts. Where a sewer main is accessible, connection feasibility and costs can determine whether you choose sewer or septic. Confirm boundaries and connection requirements with the county and relevant district.
Utility extension checklist
- Call DMEA to confirm nearest power infrastructure, service design, and potential line-extension costs.
- Verify natural gas availability or plan for alternatives if a line extension is not practical.
- Check fiber or internet options for your exact address and coordinate trenching with power or gas to save time.
- Ask the county or district whether public sewer is available and get written connection requirements.
Timeline and budget planning
- Well permits: DWR review of a complete application often takes weeks and may run up to about 49 days. Start as soon as you go under contract.
- Septic: Site evaluations, design, permitting, installation, and inspections can take weeks to months depending on soils and workload.
- Utilities: Line extensions can range from weeks to many months, especially if easements or long runs are needed.
Build these items into your financing and construction timeline, and request written estimates and availability letters for your lender.
How to keep your deal financeable
- Prioritize lots with documented utilities or clear paths to service. Provide your lender with availability letters and cost-to-connect quotes.
- For private water and septic, collect permits, test results, and inspection reports early. Share them with the appraiser when requested.
- If you plan to build soon, ask lenders about a construction-to-permanent option and be ready with plans, a builder, and a budget.
- Budget for variability. Rocky drilling, engineered septic, or long utility runs can shift costs materially.
Work with a local guide
Montrose and the surrounding mountain markets reward careful due diligence. You deserve a guide who blends local relationships with technical clarity. If you want a calm, step-by-step plan for wells, septic, and utilities, reach out to Mike Weist. You will get straight answers, local contacts, and a financing-aware timeline that keeps your land purchase on track.
FAQs
What down payment do lenders usually require for Montrose land?
- Land loans often require larger down payments than home mortgages, and raw or unimproved lots are the most restrictive. Expect higher rates and shorter terms compared to traditional mortgages, as summarized by national lender guides.
How long does it take to get a Colorado well permit?
- The Colorado Division of Water Resources notes that complete well permit reviews can take weeks and may run up to about 49 days, so submit early in your due diligence.
Will a private well satisfy my lender if there is no public water?
- Yes, if the well is viable and properly documented. Lenders and appraisers need proof of legal access or ownership and acceptable distance from septic components to meet program requirements.
How much should I budget for a new septic system in Montrose County?
- Conventional systems in Colorado often range from roughly 4,000 to 15,000 dollars or more, with engineered systems higher. Get multiple local bids based on your soil and design.
Who provides electricity and internet to rural Montrose parcels?
- Delta‑Montrose Electric Association typically serves much of the area and operates Elevate Internet for fiber in many locations. Contact DMEA to confirm service, timing, and any line-extension costs.
