Land Loans: The Complete Guide

Last updated June 2026. Reviewed for accuracy by the LandLoan.ai editorial team.

Key takeaways

Land loans are a separate product category from home mortgages.
Down payments of 20%–50% are typical; raw land sits at the high end.
Specialty lenders (Farm Credit, FSA, community banks) often beat large national banks on land.
Plan time for appraisal, survey, title work, and possible perc/environmental reviews.

What is a land loan?

A land loan finances the purchase of vacant land. Because there is no home (or income-producing improvement) attached, lenders consider land loans riskier than mortgages and price them accordingly. The result: larger down payments, higher rates, and shorter terms than a typical home loan.

How land loans differ from a mortgage

Feature	Land Loan	Mortgage
Collateral	Vacant land	Home + land
Typical down payment	20%–50%	3%–20%
Term	5–20 years, often with balloon	15–30 years
Rate	Typically higher	Typically lower
Lender pool	Smaller, specialized	Broad

The main types of land loans

Raw land loans — undeveloped land with no utilities, roads, or improvements.
Unimproved land loans — some access but limited utilities.
Improved land loans — utilities, road access, build-ready.
Lot loans — smaller residential parcels.
Construction-to-permanent loans — combine land + build into one closing.
Agricultural / farm land loans — for working farms or ranches.
USDA Section 502 / FSA programs — for qualifying rural and farm buyers.

Who lends on land

Community banks and credit unions
Farm Credit System lenders
USDA Farm Service Agency (FSA)
Specialty land lenders
Seller financing

The process at a glance

Define the land type and use
Get pre-qualified
Make an offer
Appraisal and survey
Title work and underwriting
Close

Sources: USDA ERS Land Use, Land Value & Tenure, Farmer Mac, Federal Reserve Ag Finance Databook.

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