EMPIRE WEST MORTGAGE LENDING

Land Loans

 

A Land Loan is a financing option used to purchase raw land, improved lots, or parcels intended for future construction. Because land carries different risks than an existing home, these loans follow unique underwriting standards and may offer a variety of structures depending on the location, intended use, and stage of development.

Land loans are commonly used by buyers planning to build a primary residence, vacation home, investment property, or commercial structure in the future.

 

Types of Land Loans

Lenders typically categorize land into three main types, each with distinct qualification requirements:

 

1. Raw Land (Unimproved Land)

• Land with no utilities, infrastructure, or access roads.

• Carries the highest level of risk, requiring larger down payments and strong financial profiles.

• Best suited for borrowers with long-term plans or future construction projects.

 

2. Unimproved or Partially Improved Land

• May include basic access, limited utilities, or partial infrastructure.

• More accessible than raw land but still considered moderate risk.

• Down payment requirements vary, often lower than for raw land.

 

3. Improved Lots (Build-Ready Land)

• Fully developed land with utilities, sewage, roads, and infrastructure in place.

• Offers the most favorable terms, often similar to residential construction loans.

• Preferred by borrowers preparing to build in the near term.

 

Key Advantages of Land Loans

• Flexible Use: Suitable for residential, investment, agricultural, or commercial purposes.

• Long-Term Planning: Ideal for buyers wanting to secure a location before building.

• Variety of Loan Structures: Fixed-rate, adjustable-rate, and interest-only options may be available depending on lender guidelines.

• Supports Future Construction: Many borrowers combine a land loan with a construction loan when ready to build.

 

Typical Requirements

While guidelines vary by lender, borrowers can expect:

• Higher Down Payments: Often 20% to 50%, depending on land type and risk level.

• Detailed Land Information: Survey, zoning details, access information, and intended use.

• Strong Credit Profile: Higher credit standards due to the risk associated with undeveloped land.

• Clear Build Plan (Optional): Can improve loan terms if a future construction plan exists.

 

Who Is a Good Candidate for a Land Loan?

This program is ideal for:

• Buyers planning to build a custom home

• Investors acquiring future development sites

• Individuals purchasing rural or recreational land

• Developers securing lots before construction

• Borrowers exploring long-term land appreciation opportunities

 

Why Choose a Land Loan?

Land loans allow buyers to secure property in strategic or desirable locations before development occurs. With tailored loan structures and flexible usage options, this financing solution supports both long-term planning and real estate investment strategies.