Land down payments are typically 20 to 30 percent of the purchase price, though some lenders accept 10 to 15 percent and a few require up to 50 percent.
The amount depends on what kind of land you are buying, whether it has utilities or structures on it, and which lender you work with. Raw land — empty acreage with no water, sewer, or electric hookups — usually requires a larger down payment than land with existing improvements. A lender sees raw land as riskier because it takes longer to develop and harder to sell if you default.
Your credit score, income, and the loan-to-value ratio (how much you are borrowing against what the land is worth) all shift the number. A buyer with a 750+ credit score and stable income might put down 15 percent. A buyer with a 650 credit score or self-employment income might need 30 to 40 percent.
Key Takeaways
- Raw land typically requires 20 to 30 percent down, while land with utilities or structures may accept 15 to 20 percent.
- Lenders set down payment amounts based on credit score, income stability, and how quickly the land could be resold if you stopped paying.
- Land loans from banks often require larger down payments than mortgages on homes because lenders view undeveloped property as higher risk.
- Some agricultural lenders and credit unions offer different terms than conventional banks, so comparing multiple lenders can lower your required down payment.
Why land down payments are higher than home mortgages
A mortgage on a house typically requires 3 to 20 percent down. Land loans ask for more because a house is easier to sell quickly if the borrower defaults. A lender can foreclose on a house, list it, and recover their money in months. Raw land sits on the market longer and may sell for less than the outstanding loan balance.
Lenders also consider what the land will become. If you are buying land to build a house, the lender may require proof that you have financing lined up for construction. If you are buying agricultural land, they want to see a farming plan or lease agreement. Land with no stated purpose looks riskier, and the down payment goes up.
Down payment ranges by land type
| Land Type | Typical Down Payment Range | Why It Varies |
|---|---|---|
| Raw land (no utilities) | 25–50% | Longest development timeline, hardest to resell, no when ready income potential |
| Land with utilities (water, sewer, electric) | 15–25% | Faster to develop, easier to sell, lower risk to lender |
| Land with structures (barn, cabin, mobile home) | 10–20% | Existing improvements lower risk; treated closer to real estate than raw land |
| Agricultural land with lease or income | 15–25% | Existing cash flow reduces risk; lender sees ongoing revenue |
How lenders calculate your down payment requirement
Lenders use the loan-to-value ratio (LTV) to decide how much you must put down. If land is appraised at $100,000 and the lender will lend up to 75 percent of that value, you must put down 25 percent ($25,000). The lower the LTV the lender offers, the larger your down payment.
Your credit score moves the LTV. A score above 740 might get you 80 percent LTV (20 percent down). A score between 650 and 700 might get you 60 to 70 percent LTV (30 to 40 percent down). Some lenders will not lend on land at all if your score is below 640.
Income stability also matters. If you are salaried, lenders can verify two years of tax returns and a recent pay stub. If you are self-employed, they want three years of tax returns and may require a higher down payment because income looks less predictable. Seasonal income (farming, construction) can push the requirement up by 5 to 10 percent.
Where to find land loans with lower down payments
Banks and mortgage companies are not the only lenders. Credit unions often have more flexible land loan programs and may accept 10 to 15 percent down if you are a member. Farm Credit (a network of lenders owned by farmers) specializes in agricultural land and may require 20 to 25 percent down instead of 30 to 50 percent.
Some portfolio lenders — banks that keep loans on their own books instead of selling them — have more room to negotiate. They may accept lower down payments or unusual land types because they are not bound by the rules of mortgage investors who buy loans on the secondary market.
Seller financing is another route. If the seller is willing to finance part of the purchase, you might put down 10 to 20 percent to the seller and finance the rest through them instead of a bank. This is common for rural land and land that banks will not lend on at all. The trade-off is that seller-financed loans often carry higher interest rates and shorter repayment periods (5 to 10 years instead of 15 to 30).
What happens if you put down less than the lender requires
Some lenders offer private mortgage insurance (PMI) for land loans, though it is less common than for home mortgages. PMI lets you put down 10 to 15 percent instead of 20 to 30 percent, but you pay an insurance premium on top of your interest rate — usually 0.5 to 2 percent of the loan amount per year. Over a 20-year loan, that adds up significantly.
Not all lenders offer PMI on land. If yours does not, you have three options: put down the full amount the lender requires, find a different lender with a lower requirement, or use seller financing. Putting down less than required without PMI is not possible — the lender will not close the loan.
Costs beyond the down payment
The down payment is not the only money you need upfront. Land loans also require a survey (to confirm boundaries), an appraisal (to establish value), a title search (to confirm ownership history), and closing costs. These typically run 2 to 5 percent of the purchase price and are separate from the down payment.
If the land is in a flood zone, you may need flood insurance before closing. If it is in a rural area without municipal water or sewer, you may need to budget for a well and septic system before you can build — costs that do not affect the down payment but affect your total investment.
Frequently Asked Questions
Can I put down less than 20 percent on land?
Yes, some lenders accept 10 to 15 percent down, especially if your credit score is strong and the land has utilities or structures. Credit unions and agricultural lenders are more likely to offer these terms than conventional banks. Seller financing is another option if you cannot meet a lender's down payment requirement.
Do I need a larger down payment for raw land than for land with a house on it?
Yes. Raw land typically requires 25 to 50 percent down, while land with a house or other structure may require only 10 to 20 percent. Lenders view improved land as lower risk because it is easier to sell and may generate income when ready.
What if I have a low credit score?
Lenders may require 30 to 50 percent down if your credit score is below 700, or they may decline to lend at all. Credit unions, agricultural lenders, and portfolio lenders sometimes work with lower scores. Seller financing is often the most realistic option if your credit is poor.
Does the location of the land affect the down payment?
Yes. Land in a developed area with utilities and road access typically requires a smaller down payment than remote rural land. Land in a flood zone or with environmental concerns may require a larger down payment or be declined entirely.
Can I use a gift for my down payment?
Most lenders allow gift funds for land down payments, but you will need a gift letter from the person giving the money stating it is a gift, not a loan. Some lenders limit how much of your down payment can be a gift; others allow 100 percent. Ask your lender before accepting a gift.