Land Only Loans: An Uncommon Financing Option

Land only loans are lending vehicles that facilitate the purchase of property without the immediate intent to develop it. This type of lending is not very common, but it can be obtained.

What Land Only Loans are Used For

There are several reasons why an individual would seek out land only loan options. They include:

  • buying property for development much further down the road
  • purchasing land for agricultural purposes
  • purchasing land for recreational purposes
  • buying land adjacent to an existing residential or commercially developed property

Obtaining Land Only Loans

While land only loans are not necessarily common, they are available through a variety of lending sources. Traditional banks, mortgage companies and credit unions may all write these loans. Obtaining funding for land that will have an immediate purpose even without development can be easier. Agricultural or property extension loans, for example, might be more attractive to lenders because they present with a slightly lower risk.

What to Expect from the Approval Process

The process to obtain a land only loan is similar to any other application for funding. Borrowers can expect to have to fill out detailed request forms, provide proof of income and credit and possibly produce survey and appraisal reports for the land. A down payment of 20 to 50 percent may also be required.

Land only loans are not common, but they can be secured. The likelihood of approval will depend on the borrower's credit standing, the land's value and the asking price, among other things.

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