Last updated ·Published ·By the WiserWork team
Land Loan Calculator
Raw, unimproved or improved land: payments at the down payments and rates land actually gets
Short answer: Land needs far more money down than a house. Federal bank-lending guidelines set the supervisory ceiling at 65% loan-to-value for raw land and 75% for land under development — 35% and 25% down. Terms are shorter, rates sit above mortgage rates, and nothing is escrowed, so the payment is pure principal and interest.
Worked example: The tool opens on an unimproved lot: $120,000 at 30% down. $36,000 down leaves an $84,000 loan; at 8.5% over 15 years that is $827.18/month and $64,893 of total interest — more interest than a 30-year mortgage of the same size would charge in its first decade.
Source: Federal Reserve — Interagency Guidelines for Real Estate Lending Policies. These are supervisory limits on the lender, not a legal cap on you; individual lenders routinely require more down than the table allows.
| Land type | Typical down | Typical rate premium | Typical max term |
|---|
Land is the asset banks trust least: it produces no income, can't be occupied, and is the first thing buyers abandon in downturns — so financing it costs more at every dial. Down payments run 20–50%, rates price 1–3% above mortgages, and terms are short. This calculator prices the payment at the terms land actually gets, tiered by the only thing lenders really ask: how close is this dirt to being a buildable, resellable lot?
The Three Tiers of Land (and Lending)
| Tier | Definition | Down | Rate vs mortgage | Term |
|---|---|---|---|---|
| Raw | No road access, no utilities, unplatted | 35–50% | +2–4% | 5–10 yrs |
| Unimproved | Access exists; utilities near but not at the line | 25–35% | +1.5–2.5% | 10–15 yrs |
| Improved lot | Utilities at the line, platted, ready to build | 15–25% | +0.75–1.5% | 15–20 yrs |
Where to Actually Get a Land Loan
- Local banks and credit unions — they know the county, keep loans on their books, and write most US land loans. National mortgage lenders largely won't touch raw land.
- Farm Credit system lenders — cooperative lenders specializing in rural land and acreage, often the best rates for larger parcels.
- Seller financing — extremely common in land: sellers of long-held parcels often carry the note at negotiable terms; everything (rate, down, term, balloon) is on the table.
- Construction-to-permanent loans — if you'll build within ~12 months, one loan can cover land + construction and convert to a normal mortgage; usually the cheapest path for build-soon buyers.
Due Diligence: the Money Is in the Homework
Every experienced land buyer's checklist, in order of deals killed:
- Perc test / septic feasibility — un-buildable soil makes rural land nearly worthless; make the offer contingent on it.
- Legal access — a recorded easement or road frontage; "we've always driven through Earl's field" is not access.
- Utilities distance — power line extension can run $15–50+ per foot; a quarter mile is a five-figure surprise. Well + septic + off-grid solar have their own budgets.
- Zoning, setbacks and restrictions — confirm your intended use is permitted in writing from the county, and read the plat's covenants.
- Survey and title — boundary disputes and mineral-rights carve-outs are land specialties; buy the owner's title policy.
- Flood, wetlands and slopes — FEMA maps and the NRCS soil survey are free and take an evening.
How to Use the Calculator
- Pick the land tier — realistic down payment and rate load automatically; overwrite with quotes.
- Enter price and term (shorter than a mortgage — that's normal).
- Read payment, cash-down and total interest — then budget the improvements separately; the loan is only the beginning of what dirt costs.
Frequently Asked Questions
Why are land loans so much more expensive than mortgages?
Default math: borrowers protect the home they live in first, and foreclosed land sells slowly at weak prices. No occupancy + no income + thin resale market = more down, more rate, less term.
Can I use a regular mortgage to buy land?
No — mortgages require a habitable dwelling. The exceptions: construction-to-permanent loans (building soon), and USDA/VA construction programs in limited cases. Land alone takes a land loan, seller financing, or cash.
Is seller financing common for land?
Very — likely more common than bank financing for rural parcels. Sellers who own outright often prefer interest income over a lump sum. Negotiate everything, record the deed properly, and have a lawyer paper it.
What does it cost to make raw land buildable?
Typical rural build-prep: well $8–25k, septic $10–30k, power extension $15–50/ft, driveway/grading $5–30k, permits vary. It's common for improvements to exceed the land price — budget before buying, not after.
Do land loans have balloons?
Frequently — e.g., 20-year amortization with a 5-year balloon, expecting you to build, refinance or pay off. Know the balloon date and your plan for it before signing.
Is buying land a good investment?
It's a patience asset: no income, ongoing taxes, illiquid — but finite in supply and unleveraged by most owners. As a place to eventually build, buying early can lock in location; as pure speculation, the carrying costs eat casual investors.
Is my information private?
Yes — every figure computes locally in your browser.
Land rewards the buyer who does the boring homework — perc test, access, utilities, zoning — and punishes everyone else. Price the loan here, budget the improvements honestly, and remember the cheapest land loan in most counties is a motivated seller with a paid-off parcel.