You can finance land, but it’s the most conservative corner of real estate lending — because raw land produces no income, has no building to secure the loan, and is harder to sell. Expect more money down and, ideally, a plan for what the land becomes.
Why land is treated differently
Every other property we’ve covered has something securing it — income, a building, a tenant. Land has none of that. If a loan goes bad, the lender is left with a vacant parcel that may take a long time to sell. That risk is why land loans carry more down, more conservative terms, and closer scrutiny than a loan on an income-producing property.
Not all land is equal
Where the parcel sits on the spectrum matters a lot:
- Entitled, ready-to-build land — zoned, permitted, with utilities available — is the most financeable, because the path to value is clear.
- Raw, unentitled land — no approvals, no utilities — is the hardest, because that path is uncertain.
The closer the land is to being buildable, the more comfortable a lender gets.
A plan makes the difference
Land tied to a near-term build is far easier to finance than land bought purely to hold. That’s why many investors use a combined land-and-construction loan: the land purchase and the build are financed together, with a clear exit at completion. A credible plan turns a hard-to-finance parcel into a fundable project.
What you’ll bring
Expect a higher down payment — often 30% or more — with the exact figure driven by how entitled and buildable the land is. Reserves and a clear intended use strengthen the file. The rawer the land and the vaguer the plan, the more conservative the terms.
A typical deal
A scenario I see often: an investor buying an entitled lot with a build planned. Rather than a standalone land loan held indefinitely, we look at financing the land and the construction together, with the finished project’s sale or refinance as the exit. The build plan is what made the land financeable.
Looking at a parcel?
How buildable it is, and what you plan to do with it, shapes everything. Tell us about your deal and we’ll map it — in English or Spanish.
By Andres Jara — Alpha Equity Lending (NMLS #1855083). 20+ years in real estate finance, an MS in Finance, and an active South Florida investor and landlord.
