How much of a loan can I get for land?
There are no blanket rules for how much you can borrow with a land loan, and loan amounts can range depending on the type of land you’re purchasing and the mortgage lender you’re working with.
One lender might help you finance up to 85 percent of the cost of developed land, for example, or 70 percent of the cost of raw land. Keep in mind that how much you can borrow is directly related to how much cash you have and can put down on the transaction.
Land loan rates
Because land loans carry more risk, lenders tend to charge higher interest rates – upwards of 5 percent or 6 percent, and that’s just to start. Depending on the property and your down payment and creditworthiness, you could end up paying a higher rate than that. Because these loans tend to be more expensive, it’s all the more important to take your time to compare multiple lenders before you settle on one.
How to get a land loan
Before you start looking for a loan, Fleming recommends developing a comprehensive plan for what you want to do with the land. That can help you determine what type of loan and terms are best for your goals.
If you haven’t found a site yet, use websites like LandWatch, LandSearch and to search for properties based on your preferences and what you plan to do with the land. You can also use these sites to connect with a real estate agent who specializes in land purchases.
As with any other type of loan, it’s important to shop around. It can be a good idea to work with a broker experienced in land loans, but if you want to shop around yourself, one place to start is to see if you qualify for any of the government-sponsored loan programs. You might also want to get in touch with local lenders and credit unions, who could be more likely to extend you this kind of financing.
Run a quick search online to find land loan providers in your area. Make sure you read the requirements carefully and reach out to a loan officer to talk about your situation and your chances of getting approved. (περισσότερα…)