raw land loans

4 Replies

what type of loans can you get on raw land? I was told you can only get a 30 year mortgage with the land has a home on it... is this true? What about interest rates on raw land, typically a lot higher?

Dustin07,
That's not quite accurate. You can get 10, 15, 20 and 30 year loans. But, most of them do have a balloon. So a "30 due in 5" would have a payment based on a 30 year term but it would need to be refinanced or sold at 60 months.
The interest rates are higher because the loans a riskier for the lender. Typically around 1% higher.
Raw land loans are for raw land. There does NOT need to be a dwelling on the land. These loans fall into 2 general categories; developed land and undeveloped. Developed land will have a well, septic system or septic design or access to a water system. Also power and a road to the property.
Most raw land loans require 20% down payment. But, lately we have been seeing lenders offering 10% down to excellent credit borrowers.

Hope that helps!

If you have raw land and plans to develop the land, that will help as well. You can get a development loan as opposed to what people consider, "Hard Money" for just the land itself. Most banks typically do not want to lend on the property if there are no approved plans for development so you have to turn to private investment.