Sat, 23 Oct 2021

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Nowadays, getting land under your name is one of the best ways to have a long-term investment that does not depreciate and brings you lots of benefits. As time passes by, many people are getting more enticed to buy land through financing a loan. Imagine, having your land gives you the right to either have a space to construct your long dream home or a commercial business building for other people to rent.

Applying for a loan is a great idea if you are employed, have a stable income, and possess a good credit score. In this sense, there is a higher chance that you could get a lower interest rate for the loan. Otherwise, you might struggle with paying for rates having high interest. So, if you're a newbie and interested in knowing more about getting a loan to buy land, continue reading below.

Understand What Is Land Loan

Buying vacant land could be exciting, beneficial, and a great investment. When a buyer is interested in land to build a home or use it for business purposes, a land loan is typically used to finance the land.

Land Loans are one of the many financing options utilized to buy land that could be secured through a lender or even through a bank. The lender or the bank will facilitate and evaluate the loanee's credit history, employment status, and more to make sure that the buyer is eligible for a loan.

Know the 3 Common Types of Land Loans

Raw Land Loan

A raw land loan is a land that is not yet developed land, and there have been no improvements. Usually, if you purchase raw land, it comes off more attractive to buyers since it's cheaper, and you get to enjoy the flexibility to decide on what you want to do with the land but, of course, with the proper agreement with the local laws in your state. If you find this interesting, you'll need to request a raw land loan.

Other than that, make sure that you come up with a solid, doable, and detailed plan of action on how you would develop the land. In this way, it would not be too risky for lenders and allow them to see that you are committed to the project you'd agreed on as a loanee.

Unimproved Land Loan

Raw land loan and the unimproved land loan has some similarities, but the latter tends to be more developed. Usually, it comes with a few facilities but still lacks features like a phone box, electric meter, and the like.

Not to mention, when compared to raw land loans, an unimproved land loan is not as risky. But, this does not make it easier to get. Typically, it's coupled with a high down payment and interest rate compared to other types of financing loans.

Improved Land Loan

If you want to have land with great access to roads and more developments, an improved land loan might be the right financing. Although they tend to be more expensive to purchase, they are secured to be a developed type of land. The thing that's great about this loan is that down payments are lower, but it's essential that you still maintain a good credit history and score.

Learn Ways to Get a Land Loan

If you already have experience in getting a traditional mortgage, you would find the process of getting a land loan somehow similar. With the three land loan types mentioned above, you would need to be eligible for varying qualifications that come with the type of land loan you are interested in getting.

Do not be shocked by the strict qualifications needed when getting a land loan since land loans tend to be a higher-risk investment. Also, consider finding a local bank for a loan and a lender who is an expert in land financing and has experience with land transactions. In that case, they could give you better terms for a loan approval than what a national institution could offer.

Ask About the Land Fundamentals

Land fundamentals entail the boundaries, the zoning, and access to the land. You must consider the land fundamentals of your potential land purchase. This way, you would know the scope and what entrails your possible land purchase. Surveyors must provide and mark great boundaries of what the purchase entails.

Additionally, everything that is seen on the paper should align with what is presented to the lender. Ensure that the zoning of the land will allow you to legally contribute to the completion of your desired project. For instance, if you wish to build a house, make sure your land is zoned suitable for residential usage.

Weigh the Pros and Cons

If you want to apply for a loan to buy land, always see to it that you consider all your financing options, like what type of loan would be best and the pros and cons of your decisions.

For instance, if you want to buy land for business purposes, make sure that your land of choice will align with your envisioned goals, and your loan application will help you get to that goal. Also, ask the rules there might be made for your land and what they allow you to do and you cannot do.


Even though there are many perks in having your land, one important thing you should always consider- the cash payment. Not everyone has the advantage of having enough money in an instant to purchase a land of their choice. Luckily, there are many loans that you could apply for as long as you qualify for the requirements.

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