Can I get a loan to buy raw land?
Yes, you can finance raw land, but expect 30 to 50 percent down, rates of 8 to 13 percent, and terms of one to five years from local banks, credit unions, private lenders, or the seller. Land with approved entitlements or a construction plan in motion gets better terms because the lender can see the exit.
Who lends on land
| Lender | Typical down payment | Rate | Term | Notes |
|---|---|---|---|---|
| Local bank or credit union | 30 to 40 percent | Prime plus 1.5 to 3 percent | 3 to 5 years, sometimes amortized over 10 to 20 | Wants a relationship and a plan |
| Private or hard money lender | 40 to 50 percent | 10 to 13 percent | 12 to 24 months | Fast; underwrites the exit |
| Seller financing | 10 to 30 percent | 6 to 10 percent | 3 to 10 years, often with a balloon | The most flexible source when the seller will carry |
| Farm credit lenders | 25 to 35 percent | Competitive | Up to 20 years | Agricultural and rural land |
Ranges vary widely by lender and by land type.
Why land is hard to finance
Land produces no income, is slow to sell, and is worth what the next buyer's plan says it is worth. A lender who forecloses on land holds it for a long time. That risk shows up as high down payments, short terms, and rates above construction loans.
The three tiers of land
Raw land. No entitlements, no utilities, no approved use. Hardest to finance; 40 to 50 percent down is typical.
Entitled land. Zoning and approvals in place for a specific project. Easier: 25 to 35 percent down, and some construction lenders will fund the land as the first phase.
Improved lots. Utilities and access in place, ready to build. Easiest: banks treat finished lots close to a construction loan.
What the lender wants to see
- A plan: build, hold for appreciation, subdivide, or sell to a builder, with a timeline.
- Evidence of the plan: a feasibility study, a zoning letter, a preliminary site plan, or a builder's letter of intent.
- Your liquidity and credit, weighted more than on income property because there is no rent.
- An appraisal that supports the price on comparable land sales.
- Access, utilities, and any environmental concerns addressed.
Seller financing as the first tool
Many land purchases close with the seller carrying the loan because sellers know their land is hard to finance. A 20 percent down, five-year note at 7 percent with a balloon is a common structure. Get it documented properly, and confirm the construction lender will allow the seller's loan to be paid off or subordinated when you build.
From land loan to construction
A land loan is usually paid off by the construction loan, which treats the land equity as your contribution. Buying land with a short-term loan and building within twelve months is the normal sequence; holding raw land on a private loan for years is expensive.
How CommFi handles it
Our lending desk reads the land and the plan together and prices the cheapest path, including seller carry when it fits. It funds direct when it fits, and when a bank or land specialist is the right source, the desk searches a database of 7,000+ lenders and the ones that lend on land in your market compete for it. Zero upfront fees.
Related reading
Related questions
- How much down payment do I need to buy land?
- Typically 30 to 50 percent for raw land, 25 to 35 percent for entitled land, and less with seller financing.
- What interest rate do land loans have?
- Prime plus 1.5 to 3 percent at banks, 10 to 13 percent from private lenders, and 6 to 10 percent on seller-carried notes.
- Can I get a 30-year loan on land?
- Rarely. Most land loans are one to five years, sometimes amortized over ten to twenty with a balloon.
- Is it easier to finance land with a building plan?
- Yes. Entitlements, a site plan, and a construction timeline turn a land loan into the first phase of a construction loan for many lenders.
- Will a seller finance land?
- Often. Sellers know land is hard to finance, and a seller-carried note with 10 to 30 percent down is a common structure.
Property developer and licensed appraiser. 22+ years in real estate: TIC conversions, multi-unit redevelopments, mixed-use, fix and flips, commercial DSCR.