What Are Some Ways to Finance Land?


Quick Answer

It is possible to finance land purchases with land or lot loans; these loans typically differ from standard property loans, such as home mortgages in that they may have larger down payments and higher interest rates, as stated by Bankrate. In addition to being different from other kinds of property loans, land and lot loans may differ from each other, according to LotNetwork. Lot loans may apply more to pieces of land within developed areas such as subdivisions, while land loans may be more suitable for undeveloped parcels of land in rural areas.

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Full Answer

Banks use a variety of factors to determine whether a parcel of land is best suited for a lot or a land loan. These factors may include acreage, with larger properties typically being classified as land rather than a lot, notes LotNetwork. Banks may offer different loan terms and interest rates among these two different kind of land purchase financing.

Other classifications of land financing may include a raw land loan or an improved property loan. Raw land loans typically apply to areas where there is little infrastructure, such as sewer, power and other utility connectivity. Improved property loans are easier to get and will likely only apply to areas that have this type of infrastructure, as reported by Bankrate.

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