Land Loan Calculator
Estimate payments on a raw or lot land loan, with or without a balloon.
Details
= $45,000
0 = no balloon, fully amortizing
Monthly payment
$911.21
Loan amount
$105,000
Total interest
$113,691
Total paid
$218,691
Monthly loan payment
$911.21
This estimates payments on a loan for raw land or a building lot, using the shorter terms and higher rates these loans normally carry.
It shows the monthly payment and total interest, so you can compare it against a standard mortgage on the same amount.
How land loans differ from mortgages
A land loan finances a plot with no house on it. Lenders treat it as a substantially riskier proposition than a mortgage, because vacant land produces no income and is much harder to sell if the borrower stops paying.
That risk shows up in all three terms at once: a larger down payment of roughly 20% to 50%, a higher interest rate, often 1-3 percentage points above mortgage rates, and a shorter term, commonly 10 to 20 years rather than 30.
How raw the land is matters as much as anything. A finished lot with road access, water, sewer and power gets far better terms than untouched acreage with no utilities and no clear route to a building permit.
The payment is about 56% higher, and both the rate and the shorter term contribute. Budgeting from mortgage terms understates a land purchase badly.
What to enter
- Land price and down payment
- Expect to put down 20% on a finished lot and considerably more on raw acreage. Some lenders want 50%.
- Interest rate
- Typically 1-3 points above prevailing mortgage rates, and higher again for undeveloped land.
- Loan term
- Usually 10 to 20 years. Thirty-year land loans are rare, and some lenders write shorter terms with a balloon payment at the end.
- Land type
- Improved lot, unimproved lot or raw land. This is what most affects the rate and the down payment a lender will accept.
The three kinds of land, and how lenders see them
- Improved lot
- Road access plus water, sewer and electricity connected. The best terms available, and closest to mortgage pricing.
- Unimproved lot
- Road access but some utilities missing. Higher rate and a larger down payment.
- Raw land
- No access and no utilities. The hardest to finance, the largest down payment, and often only available from local banks or the seller.
- USDA and seller financing
- Alternatives worth checking. Some USDA programmes cover rural lots, and sellers sometimes finance directly on better terms than a bank.
What this assumes
The payment is amortising. Some land loans carry a balloon, where a large balance falls due after a few years.
Land carries costs beyond the loan: property tax, and often clearing, surveying, perc testing and utility connection before anything can be built.
How to calculate payments on a land loan
The maths is a standard amortising payment. What differs from a mortgage is the inputs you should be putting into it.
- P
- Loan amount, after a down payment that is larger than a mortgage's
- i
- Monthly rate, normally 1-3 points above mortgage rates
- n
- Months, commonly 120 to 240 rather than 360
Work out the real down payment. Use the lender's actual requirement for your land type, not a mortgage-style 20% assumption.
Use a land-loan rate, not a mortgage rate. Quotes vary widely between lenders here, more than they do for mortgages, so it is worth calling several.
Set the term the lender will actually offer. Fifteen years is common. The shorter term alone raises the payment substantially.
Ask whether there is a balloon. If the loan balloons in five years, the monthly payment is not the whole story and you need a plan for the balance.
See a worked example: budgeting from mortgage terms and getting it wrong
- Land price
- $100,000
- Down payment
- 30%, so a $70,000 loan
- Terms
- 8.5% over 15 years
Payment: $689 a month.
The same $70,000 on 30-year mortgage terms at 6.5% would be $442.
That is 56% more, and both differences contribute: the higher rate and the halved term.
The down payment differs too. At mortgage-style 20% you would put down $20,000; at 30% it is $30,000.
$689 a month, against $442 on mortgage terms
Frequently asked questions
Because the collateral is weaker. Vacant land generates no income, and if a borrower defaults it is slower and harder to sell than a house.
Lenders price that risk in, typically 1-3 percentage points above mortgage rates, and they also want a bigger deposit so they are covered if values fall.
Commonly 20% for an improved lot with utilities, and considerably more for raw land. Some lenders want 50% on undeveloped acreage.
Improvements are what move the number. A lot with road access, water, sewer and power looks much more like a house to a lender than an empty field does.
Often, and it can be the cleanest route. Some lenders offer a construction-to-permanent loan that covers the land, the build and the eventual mortgage in one facility.
That avoids two sets of closing costs and one refinance. If you intend to build, ask about a construction-to-permanent loan before taking a standalone land loan.
A large lump sum due at the end of a short term. The loan is often amortised as though it ran for 20 or 30 years, but the whole remaining balance falls due after five.
It keeps the monthly payment low and leaves you needing to refinance, sell or pay it off on a fixed date. Ask directly whether a quoted loan has one.
Survey, perc test if there is no sewer connection, clearing, grading, driveway access and utility connections. Any of these can run into five figures.
Zoning and permits matter just as much. Confirm the land can be built on for your intended use before you buy, because a lender will not care that you were surprised.
Problems people actually run into
Budgeting a land purchase on mortgage terms
Buyers work out what $70,000 would cost on a 30-year mortgage, get $442, and plan around it. The real land loan payment is $689.
The gap comes from three changes at once, and each is significant on its own. Get an actual quote for the specific parcel before you commit to a price.
Buying land you cannot build on
Zoning restrictions, failed perc tests, wetlands designations and access easements can all make a parcel unbuildable, and none of them are visible from the listing.
Make the purchase contingent on confirming zoning, a passing perc test and legal access. Land you cannot build on is very hard to sell to anyone else either.
Results are estimates for general information only and are not professional financial, medical, or legal advice. Read our full disclaimer.
Last updated: September 4, 2026