Land Loan Calculator
Calculate payments for raw land, lot land, or construction loans. Land loans typically require higher down payments and shorter terms than traditional mortgages.
Land Information
Typical: 35-50%
Typical: 8-12%
Loan Terms
Typical: 2-5 years
Understanding Land Loans
Land loans are specialized financing options for purchasing undeveloped property. Unlike traditional mortgages, land loans carry higher risks for lenders, resulting in stricter requirements and different terms.
Types of Land Loans
Raw Land
- Definition: Undeveloped land without utilities
- Down Payment: 35-50%
- Interest Rate: 8-12%
- Term: 2-5 years
- Features: Often includes balloon payment
Lot Land
- Definition: Land with utilities and infrastructure
- Down Payment: 20-25%
- Interest Rate: 7-10%
- Term: 5-15 years
- Features: More favorable terms than raw land
Construction Loan
- Definition: Combined land and construction financing
- Down Payment: 20-25%
- Interest Rate: 7-9% (variable)
- Term: Construction period + mortgage
- Features: Interest-only during construction
Qualification Requirements
Common Requirements
- Credit Score: Minimum 680-720
- Debt-to-Income: Below 36-43%
- Cash Reserves: 3-6 months payments
- Income Verification: 2 years tax returns
- Property Survey: ALTA boundary survey required
- Appraisal: Professional land appraisal
- Environmental: Phase 1 assessment may be required
- Zoning: Confirmation of permitted use
Cost Considerations
Raw Land Development Costs
- Site preparation and clearing: $5,000-25,000
- Utility connections (water, sewer, electric): $10,000-50,000
- Septic system installation: $3,000-10,000
- Well drilling: $3,000-15,000
- Access road construction: $5,000-20,000
Additional Expenses
- Property taxes (varies by location): 0.5-3% of value
- Property insurance: $300-1,000 annually
- Maintenance and security: $500-2,000 annually
- Legal and closing costs: 2-5% of purchase price
Alternative Financing Options
Owner Financing
The seller acts as the bank, allowing buyers to make payments directly to them. Often includes more flexible terms but may have balloon payments.
Home Equity Line of Credit
Use equity in your existing home to finance land purchase. Typically offers lower interest rates but puts your home at risk.
Tips for Success
Before You Buy
- Research zoning laws and building restrictions
- Verify access to utilities or cost to connect
- Check for environmental concerns or restrictions
- Understand property taxes and assessment practices
- Consider future development plans for the area
- Get professional land appraisal and survey
Important Disclaimers
- Land loans are high-risk investments with no guarantee of appreciation
- Raw land generates no income while you pay loan and carrying costs
- Development costs can exceed original estimates significantly
- Market conditions can affect land values and development feasibility
- Consult with real estate professionals before making land purchases