What is a Land Loan?
Also known as lot loans, this type of financing helps you make a land purchase. Land loans can help you purchase a parcel of land now to do something with in the future. People also buy land to hunt or farm on. If you’re ready to start building on your land right now, you may want to consider a construction loan instead.
Types of Land Loans
- Raw Land: Untouched by human hands, raw land has no utility hook-ups, driveway, or structures. Undeveloped land is usually not cleared either, so site preparation would be needed before building.
- Improved Land: Has some development such as utilities hook-up, a driveway, or more.
- Hunting Land: Enjoy your own private space for recreational hunting.
Things to Consider Before Buying Land
When purchasing land, it’s important to find a real estate agent with experience in land transactions. They can help you navigate considerations such as:
- Boundaries: What are the legal property lines for the land lot?
- Zoning: Is it zoned residential, rural, industrial, or commercial? Does the zoning match your intended purpose for the land?
- Access: How will you access the property from the road–is there a driveway or does the property line border the road?
Get a Land Loan!
The Federal Deposit Insurance Corp. sets minimum down payment requirements for land loans:
- Raw land: Minimum down payment of 35%
- Improved land: Minimum down payment of 15%