Increasing the water-holding capacity of sandy soils will help improve efficiency of water use in agricultural production, and may be critical for providing enough energy and food for an increasing global population. We hypothesized that addition of biochar will increase the water-holding capacity of a sandy loam soil, and that the depth of biochar incorporation will influence the rate of biochar surface oxidation in the amended soils. Hardwood fast pyrolysis biochar was mixed with soil (0%, 3%, and 6% w/w) and placed into columns in either the bottom 11.4 cm or the top 11.4 cm to simulate deep banding in rows (DBR) and uniform topsoil mixing (UTM) applications, respectively. Four sets of 18 columns were incubated at 30 °C and 80% RH. Every 7 days, 150 mL of 0.001 M calcium chloride solution was added to the columns to produce leaching. Sets of columns were harvested after 1, 15, 29, and 91 days. Addition of biochar increased the gravity-drained water content 23% relative to the control. Bulk density of the control soils increased with incubation time (from 1.41 to 1.45 g cm−3), whereas bulk density of biochar-treated soils was up to 9% less than the control and remained constant throughout the incubation period. Biochar did not affect the CEC of the soil. The results suggest that biochar added to sandy loam soil increases water-holding capacity and might increase water available for crop use.