Property and construction financing
Land Loans and Lot Financing
Land financing is not simply a mortgage without a house. The lender evaluates the borrower, the parcel, its intended use, and the path from raw land or finished lot to a completed home.
Direct answer
What Is a Land Loan?
A land loan finances a parcel that does not yet contain the completed home securing a standard residential mortgage. Terms and availability often depend on whether the parcel is raw, improved, or build-ready and how soon construction is expected.
Plan the entire project. A lower land price can still create a difficult project if access, utilities, permitting, insurance, or site work is unresolved.
Questions to resolve before closing
- Legal access, zoning, and the intended residential use
- Survey, boundaries, easements, wetlands, flood information, and environmental limits
- Utilities, well, septic, site preparation, and road costs
- Whether construction will begin soon or the land will be held
- Cash needed for down payment, closing, improvements, and reserves
Program structures, advance rates, terms, and property eligibility vary by lender and transaction.
Land loan vs. construction-to-permanent financing
| Path | Often considered when | Important tradeoff |
|---|---|---|
| Land or lot loan | You are buying the parcel before the construction plan is ready | A separate construction loan and another closing may follow |
| Construction-to-permanent | Plans, builder, budget, and timeline are ready for lender review | More project documentation is needed before closing |