A down payment of thirty to fifty percent
A short term, often one to three years
A higher rate than on a built property
What sets land apart
Land produces no income. Lenders therefore ask for a larger down payment.
Common terms
- A down payment of thirty to fifty percent
- A short term, often one to three years
- A higher rate than on a built property
- Proof of the intended use
Why terms are tougher
Land repays nothing on its own. Repayment depends entirely on you.
It also resells more slowly than a built property, which raises the lender’s risk.
Land that is easier to finance
- A lot served by water and sewer
- Land in an already built-up area
- A lot with a construction permit in hand
- Land bought by an experienced developer
What to budget on top
Interest runs while the land sits idle. Count it from the first month.
Questions the lender will ask
- What do you plan to do with the land
- Within what timeframe
- With what budget
- How will you repay the loan
Prepare those four answers in writing. They form the core of the request.
The role of your down payment
It protects the lender against a drop in land value.
The harder the land is to resell, the higher it goes.
A well-located lot therefore needs less equity than an isolated one.
