Who it is for
- Buyers securing a homesite now and building in 1–3 years
- Borrowers who found the right lot in a tight market
- Investors land-banking in growth corridors
- Buyers pairing a lot purchase with a future one-time-close construction loan
Typical Land & Lot Loans requirements
| Down payment | Typically 20–50%; improved lots less, raw land more |
|---|---|
| Terms | Often 5–15 years; some 20-year options on improved lots |
| Rates | Above residential mortgage rates, land is higher risk collateral |
| Lot type | Improved (utilities, road access, perc test) vs. unimproved/raw |
| Zoning | Must support intended use; lender verifies buildability |
| Survey | New survey usually required |
Figures are typical market ranges as of October 2026. Actual terms depend on the lender, your credit, the property and the program, and are confirmed on your Loan Estimate or term sheet.
How it works
- Classify the land: improved lot (water, sewer/septic, power, road frontage) vs. unimproved/raw acreage.
- Verify zoning, setbacks, flood zone, wetlands, and perc-test status, unbuildable land is unlendable land.
- Get a land appraisal based on comparable lot sales, not house sales.
- Expect 20–50% down and a shorter term; some borrowers use a land loan as a bridge to a construction loan.
- When ready to build, refinance the land loan into a construction or one-time-close loan, the land equity counts toward your down payment.
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Pros and cons
Advantages
- Locks in the homesite while you finalize plans and permits
- Land equity reduces cash needed at construction-loan closing
- Improved lots in subdivisions finance on near-mortgage terms
Trade-offs
- Large down payments and higher rates than home mortgages
- Shorter terms mean higher payments per dollar borrowed
- Raw land without utilities or road access is difficult to finance
- Resale can be slow if the area does not develop as expected
Documents you’ll need
- Purchase contract for the lot
- Recent survey or commitment for new survey
- Zoning verification and any HOA/deed restrictions
- Perc test / soil report (if septic)
- Proof of road access and utility availability
- Standard income, asset, and ID documents
Land & Lot Loans FAQ
What is the difference between a lot loan and a land loan?
A lot loan usually means an improved residential lot, utilities available, road access, ready to build. A land loan often means unimproved or raw acreage. Lot loans get better terms; raw land demands more down and a stronger borrower.
Can I roll a land loan into a construction loan?
Yes, this is the standard play. When you are ready to build, the construction lender pays off the land loan and your equity in the land counts toward the project's down payment requirement.
How much down do I need for vacant land?
Plan on 20–50%. Improved lots in established subdivisions sit at the low end; raw rural acreage sits at the high end. Some local banks are more flexible than national lenders on land they know.
Does the land need a perc test?
If the lot will use septic, yes, lenders want proof the soil supports a system before they lend. For lots on municipal sewer, it is a non-issue.
What credit score do I need for a land loan?
Most land lenders want 680+, with the best terms at 720+. Raw land programs are stricter than improved-lot programs.
How long does it take to close a land loan?
Usually 30-45 days, similar to a mortgage. The appraisal and survey are the common delays, rural land appraisals can take longer.
Can I get a land loan on 10+ acres?
Yes, but many residential land programs cap acreage around 10-20 acres. Larger tracts usually go to agricultural or farm lenders.
What are typical land loan interest rates?
Usually 1-3% above residential mortgage rates. Improved lots get better pricing than raw land.
Can I use a land loan to buy land and build immediately?
You can, but a one-time-close construction loan is usually cheaper and simpler than a land loan followed by a separate construction loan.
Official sources
How Land & Lot Loans compare
| Land & Lot Loans | One-Time-Close Construction Loans | Ground-Up Construction Loans | Conventional Loans | |
|---|---|---|---|---|
| Best for | Buyers securing a homesite now and building in 1–3 years | Buyers building a primary residence on owned or purchased land | Spec builders | Buyers with good credit and steady income |
| Down payment | Typically 20–50%; improved lots less, raw land more | Typically 10-20%; VA one-time-close 0% for eligible veterans | , | 3% (eligible first-time buyers), 5%+ otherwise; 15–25% on investment property |
| Credit | , | , | , | 620 |
| Income docs | , | , | , | , |
Typical ranges, your Loan Estimate or term sheet confirms actual terms.
Coming soon: a 2-minute walkthrough from our loan team.
Related programs
One-Time-Close Construction Loans
A one-time-close (single-close) construction loan finances your lot purchase, the build, and the permanent mortgage in one transaction, one closing, one set of closing costs, and a rate locked before ground breaks..
Ground-Up Construction Loans
An investor construction loan funds land (or a land payoff) and vertical construction of a new 1–4 unit home in draws, then is repaid by sale or a permanent refinance.
Conventional Loans
A conventional loan is a mortgage not insured by the government that follows Fannie Mae or Freddie Mac guidelines.