Land loans typically require 20 to 50 percent down, depending on the lender and what you plan to do with the property
Land is riskier to lend on than a house, so banks ask for a larger down payment upfront. A house loan often requires 3 to 20 percent down. A raw land loan—one where you're buying undeveloped property with no structure on it—usually starts at 20 percent and can climb to 50 percent or higher. The exact amount depends on whether the land is buildable, whether you have a construction plan in place, your credit score, and the lender's own rules.
If you're buying land with a house already on it, the down payment sits closer to a standard mortgage: 10 to 20 percent. If you're buying raw land with no intention to build when ready, expect the high end—40 to 50 percent. Some lenders won't touch raw land at all, which narrows your options and can push the down payment requirement even higher at the lenders who will.
Key Takeaways
- Raw land loans require 20 to 50 percent down; land with a house on it requires 10 to 20 percent, similar to a standard mortgage.
- Lenders charge more down payment for land because it cannot be lived in, has no income stream, and is harder to sell if you default.
- Having a detailed construction plan, proof of financing for building, and a strong credit score can lower your down payment requirement by 5 to 10 percentage points.
- Interest rates on land loans run 1 to 3 percentage points higher than mortgage rates, so the down payment is not your only extra cost.
- Some lenders specialize in land loans and offer lower down payments than banks; credit unions and agricultural lenders are worth calling if a bank declines you.
Why land loans ask for more money down
A house is collateral that holds its value and can be rented out or resold quickly if you stop paying. Land with nothing on it generates no income and takes longer to sell. If you default, the lender is stuck holding an asset that costs money to maintain and may be hard to move in a slow market. That risk is why they ask for a larger cushion upfront.
Lenders also worry about what you'll do with the land. If you're buying it to build a house, they want proof you can actually afford to build—a construction loan, a detailed budget, or a contract with a builder. If you're buying it as an investment with no clear plan, the lender sees even more risk and may ask for 40 to 50 percent down or decline the loan altogether.
How down payment changes based on what you're buying
Raw land with no structures: 25 to 50 percent down. This is the highest category because the lender has the least security. Even if you have a strong credit score and a solid construction plan, expect to put down at least 25 percent. If you have no building plan or your credit is below 700, many lenders will ask for 40 to 50 percent or won't lend at all.
Land with a house or other building on it: 10 to 20 percent down. This is treated more like a standard mortgage because the structure gives the lender something tangible to foreclose on and resell. The down payment sits in the same range as a conventional home loan.
Land in a development or subdivision with utilities already in place: 15 to 30 percent down. Buildable land that already has roads, water, sewer, and electric lines is less risky than raw land in the middle of nowhere. The down payment falls between raw land and improved land with a house.
Land you plan to build on when ready: 20 to 30 percent down. If you have a construction loan lined up, a builder under contract, and detailed plans, some lenders will lower the down payment because they see a clear path to the land becoming a finished property with real value.
What lenders look at besides the down payment amount
Your credit score matters more on a land loan than on a mortgage. A score above 740 can lower your down payment requirement by 5 to 10 percentage points. A score below 680 will push it higher or disqualify you entirely. Some lenders have a hard floor at 700 or 720 for land loans.
Debt-to-income ratio—how much you already owe compared to what you earn—is stricter for land loans too. Lenders often want to see a ratio below 40 percent, compared to 43 to 50 percent for mortgages. If you're carrying student loans, car payments, or credit card debt, that shrinks how much land loan a lender will offer you.
Proof of funds matters. The lender wants to see that you actually have the down payment in a bank account, not that you're planning to borrow it from somewhere else. Bring bank statements from the last two months. If you're getting a gift from a family member, bring a letter from them stating it's a gift, not a loan.
Interest rates and total cost
Land loans cost more than mortgages in interest too. A mortgage might be at 6 to 7 percent right now; a land loan on the same day might be 7.5 to 10 percent, depending on the lender and the type of land. That 1 to 3 percentage point difference adds up over time, especially on a 15 or 20-year loan.
Some land loans are shorter—5, 7, or 10 years instead of 30—which means higher monthly payments but less total interest. Ask the lender what terms they offer. A shorter loan with a higher down payment can actually cost less overall than a longer loan with a lower down payment, even though the monthly payment is higher.
Where to find lenders willing to do land loans
Not every bank offers land loans. Call your own bank first, but be ready to hear no. Credit unions often have more flexible rules and lower down payment requirements than big banks—sometimes as low as 15 to 20 percent for buildable land. You have to be a member, but membership is often free or costs a small fee.
Agricultural lenders and farm credit associations lend on land regularly and understand rural property better than banks do. If you're buying land outside a city, these lenders may offer better terms. Mortgage brokers can shop multiple lenders at once, which saves you time, though they charge a fee (usually 0.5 to 1 percent of the loan amount).
Some online lenders specialize in land loans, but read the terms carefully. Interest rates can be high, and some require the full loan to be paid off in 5 to 10 years. Compare at least three lenders before you commit.
How to lower your down payment requirement
Have a construction plan ready. If you can show the lender a detailed set of plans, a cost estimate, and proof that you've hired a builder or have financing lined up, they may lower the down payment by 5 to 10 percentage points. A vague idea of "someday building a house" won't help.
Improve your credit score before you explore. Even a 20-point jump can move you into a better rate tier and lower down payment bracket. Pay down credit card balances and make all payments on time for at least three months before you explore.
Put down more than the minimum. If a lender asks for 30 percent and you can afford 40 percent, offering more can lower your interest rate by 0.25 to 0.5 percent. Over a 20-year loan, that saves thousands.
Buy land that's already buildable. Land with utilities, road access, and clear title is less risky. Land that requires you to get permits, clear trees, or install a septic system is riskier and will cost you more in down payment and interest.
Frequently Asked Questions
Can I get a land loan with less than 20 percent down?
Some lenders will go as low as 15 percent if the land is in a developed area with utilities, you have a strong credit score (740+), and you have a clear construction plan. Most banks won't go below 20 percent. Credit unions and agricultural lenders are more likely to offer lower down payments than traditional banks.
What if I'm buying land to hold as an investment, not to build on?
Expect 40 to 50 percent down and higher interest rates. Lenders see investment land as the riskiest category because there's no plan to improve it and no income from it. Some lenders won't touch investment land at all. You may need to look at specialized investment property lenders or private lenders.
Do I need a construction loan before I can get a land loan?
No, but having one lined up helps. If you can show the lender that a construction lender has pre-approved you for the building phase, it proves you can actually afford to build and lowers the land lender's risk. You don't need the construction loan closed yet, just a pre-approval letter.
How long does it take to close a land loan?
Land loans typically take 30 to 45 days to close, longer than a mortgage. The lender needs to order a survey, verify that the land is buildable (if that matters), and check the title carefully. Budget extra time and don't assume a land loan will close as fast as a house purchase.
Can I use a personal loan or home equity line instead of a land loan?
You can, but it's usually more expensive. Personal loans charge 8 to 36 percent interest depending on your credit. A home equity line of credit is cheaper but puts your current house at risk. A land loan, even with a higher down payment, is usually the cheapest option if you can get approved.