Who it is for
- Buyers securing a lot before they are ready to build
- Future custom-home builders locking in a location
- Investors holding improved lots in growing areas
- Rural buyers wanting acreage with a later build
Typical Land Loans requirements
| Improved lot | Utilities and road access in place; typically 20–35% down |
|---|---|
| Raw land | No improvements; typically 30–50% down |
| Terms | Often 5–20 years; some lenders offer longer amortizations with balloons |
| Rates | Higher than home mortgages; land is riskier collateral |
| Minimum credit | Typically 620–680+ |
| Acreage limits | Many residential land programs cap acreage; large tracts go to farm/ag lenders |
| Survey and appraisal | Usually required; land appraisals are thinner on comps |
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
- Decide whether the land is an improved lot or raw land, it sets the down payment and terms.
- We verify access, utilities, zoning and any restrictions (HOA, flood zone, conservation).
- An appraisal values the land against recent comparable land sales.
- Close the land loan with the larger down payment.
- When ready to build, the land equity can count toward the construction loan down payment.
Try the Mortgage Payment Calculator
Pros and cons
Advantages
- Locks in a location before prices move
- Land equity counts toward your future construction loan
- No house maintenance while you plan
Trade-offs
- Large down payments, 20–50%
- Higher rates and shorter terms than mortgages
- Carrying costs (taxes, insurance) with no income
Documents you’ll need
- Purchase contract
- Survey or plat map
- Proof of road access and utilities
- Zoning confirmation
- Standard income, asset and ID documentation
Land Loans FAQ
How much do I need to put down on land?
Typically 20–35% for an improved lot with utilities and access, and 30–50% for raw land. The less improved the land, the more skin in the game lenders want.
Can I roll a land loan into a construction loan?
Often, yes. When you build, the construction lender typically pays off the land loan and your equity in the land counts toward the down payment on the construction loan.
What is the difference between raw land and an improved lot?
An improved lot has road access, utilities (water, sewer or septic, power) and usually a recorded plat. Raw land may lack all of that, which raises the down payment and can complicate the appraisal.
Why are land loan rates higher than mortgage rates?
No house means the lender has weaker collateral and fewer buyers if they foreclose. Higher down payments and rates compensate for that risk.
Do land loans have prepayment penalties?
Some do, some do not. If you plan to build within a year or two, confirm there is no penalty before you sign.
Can I finance land as part of a one-time-close construction loan?
Yes, a one-time-close construction loan can include the land purchase and the build in a single loan, which can be cheaper than a separate land loan plus construction loan.
Can I build on the land later with the same lender?
Sometimes. Some land lenders also do construction loans and will roll you over. Ask before you commit to the land loan.
What disqualifies a parcel?
Flood zone issues, no legal road access, unbuildable zoning, wetlands restrictions, or failed perc tests. Verify all of these before you buy.
How are property taxes on vacant land?
Usually lower than improved property, but they vary by county and land use classification. Agricultural exemptions can cut them further if you qualify.
Official sources
How Land Loans compare
| Land Loans | Land & Lot Loans | One-Time-Close Construction Loans | Ground-Up Construction Loans | |
|---|---|---|---|---|
| Best for | Buyers securing a lot before they are ready to build | Buyers securing a homesite now and building in 1–3 years | Buyers building a primary residence on owned or purchased land | Spec builders |
| Down payment | , | Typically 20–50%; improved lots less, raw land more | Typically 10-20%; VA one-time-close 0% for eligible veterans | , |
| Credit | Typically 620–680+ | , | , | , |
| 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
Land & Lot Loans
Buying vacant land before you build takes a different loan than buying a house.
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.