Introduction
A land loan is money you borrow to buy a piece of land. Unlike a regular home loan, land loans often come with higher interest rates, shorter terms, and larger down payments. This makes it important to know your costs before you commit.
This land loan calculator helps you figure out your monthly payment, total interest, and the full cost of financing a land purchase. Enter your purchase price, down payment, interest rate, and loan term to get results in seconds. You can also switch between even payments and decreasing payments, choose your payment frequency, and pick from two amortization methods, including the 365/360 method commonly used by farm credit lenders.
The calculator builds a complete amortization schedule so you can see exactly how much of each payment goes toward principal and how much goes toward interest. It also shows property tax and insurance estimates side by side with your loan payment so you get a clear picture of your total cost. Use the step-by-step breakdown to understand the math behind every number.
How to Use Our Land Loan Calculator
Enter your land loan details below to see your payment amount, total interest cost, and a full amortization schedule.
Purchase Price: Type the full price of the land you want to buy.
Down Payment: Enter the amount you will pay upfront. Use the $ button to type a dollar amount or the % button to type a percentage of the purchase price. Not sure how much to put down? Try our down payment calculator to explore different scenarios.
Loan Application Fee: Enter any one-time fee your lender charges to process the loan. Set this to zero if there is no fee. You can use our closing cost calculator to estimate all the fees involved in your purchase.
Interest Rate: Pick a common rate from the dropdown or type your own rate in the box. This is the annual interest rate on your land loan.
Loan Term: Pick a term from the dropdown or type the number of years you have to repay the loan.
Payment Frequency: Choose how often you make payments. Options are monthly, quarterly, semi-annually, or annually.
Payment Structure: Select Even Payments to keep every payment the same amount. Select Decreasing Payments to pay the same principal each time, which makes each payment smaller than the last.
Amortization Method: Choose 365/360 if your lender uses the farm credit standard, which results in slightly higher interest. Choose Standard (30/360) for the conventional method.
Property Taxes: Enter the yearly property tax rate as a percentage of the purchase price. Leave it at zero if you do not want to include taxes.
Home Insurance: Enter your yearly insurance cost in dollars. Leave it at zero if you do not want to include insurance.
Click Calculate to see your results. Click Reset to Defaults to start over. Use the Amortization Schedule tab to view a payment-by-payment breakdown of principal, interest, and remaining balance.
What Is a Land Loan?
A land loan is money you borrow to buy a piece of land. Unlike a home mortgage, there is no house on the property yet. You might want the land to build a home, start a farm, or hold it as an investment. Because there is no building to serve as strong collateral, lenders see land loans as riskier than regular home loans.
How Land Loans Work
A land loan works much like other loans. You borrow a set amount, pay interest on it, and repay it over a fixed number of years. Each payment covers part of the principal (the amount you borrowed) and part of the interest (the cost of borrowing). Over time, more of your payment goes toward principal and less toward interest. This process is called amortization.
Types of Land
Lenders group land into three types, and each one affects your loan terms:
- Raw land has no roads, water, sewer, or electric service. It is the hardest to finance and carries the highest rates and down payments.
- Unimproved land may have some utilities nearby but is not fully ready to build on. Rates and terms fall in the middle.
- Improved land already has access to roads, water, and power. It is the easiest to finance and usually gets the best rates.
Interest Rates and Down Payments
Land loan interest rates are usually higher than standard home mortgage rates. Expect rates between 6% and 12% or more, depending on the land type, your credit score, and the lender. Most lenders require a down payment of 20% to 50% of the purchase price. The less developed the land, the more money you will need upfront. Lenders will also look at your loan-to-value ratio and debt-to-income ratio when deciding whether to approve your application.
Loan Terms
Land loans tend to have shorter terms than home mortgages. Most range from 5 to 20 years, though some lenders offer up to 30 years on improved lots. Shorter terms mean higher monthly payments, but you pay less interest overall. If you plan to build on the land and convert to a traditional mortgage, a refinance calculator can help you compare the cost of transitioning later.
The 365/360 Method
Many farm credit lenders and commercial banks use the 365/360 amortization method. This method calculates daily interest using a 360-day year but charges it over all 365 days. The result is slightly more interest than the standard 30/360 method. This calculator lets you compare both methods so you can see exactly how each one affects your cost. You can also view a detailed mortgage amortization breakdown to understand how interest and principal shift over the life of the loan.
Where to Get a Land Loan
You can apply for a land loan at local banks, credit unions, and farm credit associations. The USDA also offers land loans for rural areas. Some sellers offer direct financing, sometimes called a land contract, where you pay them instead of a bank. If you are buying land for a business, you might also explore an SBA loan or a commercial mortgage. For land purchased as a rental or income property, our cap rate calculator and rental yield calculator can help you evaluate whether the investment makes financial sense. Shop around and compare rates, fees, and down payment requirements before you commit. Use an APR calculator to compare the true cost of different loan offers.
Tips Before You Borrow
- Check zoning laws. Make sure the land can be used the way you plan. Our home affordability calculator can help you determine how much total property cost you can handle.
- Get a land survey. Know the exact boundaries of what you are buying. A lot size calculator can help you understand the dimensions and area of the parcel.
- Test the soil. If you need a septic system, a soil test is a must.
- Budget for extras. Property taxes, insurance, and site prep costs add up fast. Use a budget calculator to plan for all of your expenses.
- Put more money down. A larger down payment lowers your rate and your monthly bill.