- Compare bank and private lender options
- Develop your land position for future builds
- Develop lots to sell to builders
While less readily available, we have access to land loans for some scenarios. We have no doc private debt available for subdivision development to sell lots to production homebuilders, and full doc bank debt available for homebuilders banking individual lots.
What is a Land Loan?
A land loan is a loan for vacant property that does not include a budget for vertical development. Banks offer full doc loans for homebuilders to acquire lots. Private lenders and banks will fund horizontal development for vacant land, with infrastructure construction drawings approved, to develop finished lots to build on later or sell finished lots to builders.
How to get qualified for a Land Loan?
Give us a call 609-468-9324 or email [email protected] to review your land scenario and we can tell you if we have a loan program available. Not every land scenario is financeable, but we want to help with the ones where we can. Hope to earn your business!
What is raw land?
Raw land is undeveloped land that is not ready for vertical construction. Raw land is missing either zoning / approvals / permits, platting / subdivision, or hard infrastructure such as roads and utilities, before houses can be built.
What is a finished lot?
A finished lot is a building lot that is ready for house construction drawings to be approved.
How is a land development loan different from a New Construction Loan?
Land loans are used for land cost and horizontal development cost only, and not for vertical construction. New construction loans include the cost of vertical construction as loan. Generally, lenders have more appetite for new construction loans than they do for land loans.
Can I get a loan to buy land or a lot to build later?
Potentially, but the loan would have to be for at least $150k, lenders are maxed at 50-70 LTC for land purchases, and it would be a full doc bank loan with income, asset, and experience verification. A bank providing this loan would be going off your individual ability to pay them back even if you don’t sell or develop the land. For most scenarios, it is easier to get a new construction loan that includes a budget for the vertical construction, and sometimes the new construction loans will cover part of your land cost.
Can I get a loan to buy a teardown that I intend to start building later?
Yes, teardown purchase or refi is easier to finance than a vacant lot. Just don’t start demolishing the house until after you have your new construction money in place.
Land Loan from Bank vs. Land Loan from Private Loan
| Private Lender Land Loan | Land Loan from Bank | |
|---|---|---|
| Loan Amount | $1-5mm | $150k-5mm |
| Full income and asset verification | No doc loan | 2 years income and full asset verification |
| Rates, Points and Fees | Private bridge rates | Bank floating rates |
| Loan-To-Cost | Up to 75 LTC including land, Up to 100 LTC with land owned outright scenario |
50-70 LTC including land, Up to 100 LTC with land owned outright scenario |
| Loan To Value | 70% of as complete value | 70% of as complete value |
| Exit Strategy | Sell finished lots to production builder | Bank lots to build on later or sell to production builder |
All land scenarios are different. Some land scenarios cannot be financed. Nonbank Clearing is a land finance specialist and we want to help. All loans subject to credit approval.
Is it difficult to get a Land Loan?
It is more difficult to get a land loan than it is to get a fix n flip loan or a new construction loan. It is often easier to get a new construction loan that covers part of the land purchase price, than it is to get a land loan.
Land Loan Requirements
Most of the requirements for Land Loans are outlined in the graphic above. If you are getting your stuff together to apply for a Land Loan, please be ready to meet the following requirements:
- Loan Application
- Scope of Work Breakdown for Rehab Budget (if applicable)
- Copies of infrastructure development plans (if applicable)
- Current approvals status and copies of any permits
- Real Estate Owned and Real Estate Investor Experience Form
- LLC documents including Operating Agreement (if applicable)
- Title Policy meeting lender requirements
- Insurance Policy meeting lender requirements
- Purchase contract (if purchase)
- HUD1 from purchase (if purchased recently)
- Summary of work already completed since purchase (if applicable)
- Completed appraisal or desktop appraisal (ordered by lender, paid for by borrower)
- For private lender land loan, no income verification is required.
- For land loan from a bank, full income and asset verification is required.
Nonbank Clearing Advantages
- Quick underwriting and structuring
- Familiar with builder strategies and multiphase development
- Access to both bank and nonbank lenders
