Biochar has an ability to alter the biological, chemical, and physical properties of soil due to its physicochemical properties such as surface area, porosity, nutrient retention ability, available nutrient contents, aromaticity, etc. The present study was designed to evaluate the impact of physical properties and application rate of biochar on the hydraulic properties of a sandy loam soil in the short term. Biochar was produced at 500 °C from dried corn residue (BC500). The BC500 was incorporated at the rates of 0, 2.5%, 5.0%, 7.5%, and 10% (w·w−1) into the sandy loam soil and filled up to a height of 4 cm, in cores having 5 cm diameter and height. Each treatment was performed in triplicate and equilibrated for 30 days. Then saturated hydraulic conductivity (Ksat), water holding capacity (WHC), and bulk density were determined in each sample after four days of saturation at room temperature in a water bath. The BC500 particle size distribution, pores, and surface functional groups were assessed. The Ksat exhibited a highly significant exponential reduction from 0% to 7.5% of BC500 application and approached an asymptote at 10% BC500. Bulk density showed a significant negative correlation to biochar application rate. The WHC and BC500 application rate illustrated a strong positive relationship. Biochar surface was free from hydrophobic functional groups. The addition of BC500 has a positive influence on soil hydraulic properties, primarily due to the increased soil porosity. The BC500 is composed of a microporous structure and hydrophilic surface that retain water in sandy textured soils. The application of BC500 would be a wise investment to maximize the water use efficiency in soils for agricultural production.