Land Loan Calculator

A lender finances part of the purchase and takes a lien on the land. You repay in monthly installments, sometimes with a balloon at the end of a short term. Because of the extra risk, lenders ask for more detail: a survey, an appraisal, your plans for the land and often a large down payment. Local lenders may be most willing, since they know the market.

It's a loan to buy land that doesn't yet have a finished home on it, rather than a loan to build. Common uses include a future home site, farming, recreation and investment. It's different from a construction loan, which pays for building. Some buyers use a single construction-to-permanent loan that covers both the land and the home.

It depends on your finances, the land's value and its type. Lenders often limit a land loan to about 50% to 80% of its value, with raw land at the low end and improved lots at the high end. On a $150,000 improved lot at 75%, you might borrow $112,500. They'll also check your credit, income and debts, as with any other loan.

They're typically higher than rates on a comparable home loan, and they vary by lender, credit, down payment and how developed the land is. Rates move with the market, so we don't list live ones. Ask several local banks, credit unions and Farm Credit lenders, and compare the APRs and any balloon terms. The table above shows what each rate means for your payment.

Terms vary widely. Raw land loans may run from 2 to 10 years, sometimes with a balloon payment, while some lenders offer 15, 20 or longer on improved or rural land, particularly to strong borrowers. Rural land lenders such as Farm Credit may offer longer terms. If a loan has a balloon, plan how you'd pay it before signing.

Often 20% to 50%, depending on the land's development and your credit. Improved lots tend toward the lower end, and raw land tends toward the higher end. Farm Credit and some USDA programs may be more flexible in certain cases. Ask early, since saving 30% or more could take a while. A bigger down payment also strengthens your application.

Many lenders want a score of about 680 or higher, and some look for 720 or above, especially on raw land. Other factors weigh heavily too, such as your debt-to-income ratio, your down payment and your plans for the land. Local lenders and seller financing may be more flexible, sometimes at a higher rate.

It's rare. USDA loans may finance some rural home sites as part of a home purchase, and a VA loan may cover land if you're building a home right away. Otherwise, expect a substantial down payment. Using existing home equity, or an arrangement with the seller, could reduce the cash you need, though each comes with its own risks.

The owner acts as the lender. You make payments directly to them under a promissory note and a mortgage or a contract for deed, often with a shorter term and a balloon. It can be quicker and more flexible, but rates may be higher. Have an attorney or title company confirm clear title and record your interest, so you're protected if the seller has problems.

Generally, yes. There's no house to back the loan, land is less liquid, and there are fewer lenders. It's also not as simple to sell the loan to investors, so many lenders keep it on their books and set stricter rules. You can improve your chances with solid credit, a bigger down payment and a clear plan for the land.

Confirm zoning and permitted use, legal road access, easements and any deed restrictions. Find out whether utilities are available and what it would cost to bring them in. Check flood zones and wetlands, and order a survey and a soil or perc test if you plan to build. Also budget for property taxes. Problems found after closing can cost more than the land itself.

It's a large final payment of whatever you still owe when a short loan ends. Payments are set as if the loan ran 15 to 30 years, which keeps them low, but the balance comes due after 3 to 10 years. On $200,000 at 9% figured over 20 years, a 5-year balloon leaves $177,414 to pay. If you can't refinance or pay it then, you could lose the land.