What to Look for in a Land Loan

3 Min. Read

You’ve done your research, understand the requirements, and are ready to own your plot of land. Now, you’re ready to find the right lender. There are a few important things to consider in your search for a bank or credit union and the right type of land loan for your needs:

Low Down Payment

While a larger down payment can help reduce your monthly payments, a low down payment requirement can get you on your way to land ownership faster. At Marine Credit Union, you’re only required to put 10% down on your land to qualify for a loan.

Flexible Terms

The term of your land loan will affect how much you pay and how long you finance your property. Marine Credit Union offers financing of up to 30 years on land loans.

Competitive rates

The interest rate of your land loan will determine how much you pay for your property in the long run. Look for low, competitive rates to help you achieve more manageable payments.

Experienced lending team

When buying land, it’s important to work with lending staff who understand and specialize in financing land for all its various uses. Marine Credit Union lenders are knowledgeable about land loans and focused on finding the right loan to fit your needs.

How do I find the best land loan lenders?

Lenders vary in the types of land loans they offer. Different lenders may make loans for small acreage and residential lots, large acreage tracts, timberland, farmland, hunting and recreational tracts, land improvements, and construction.

It’s common for local banks and credit unions to be more likely to offer land loans than large banks. They also may have more competitive rates and better terms due to their local knowledge and understanding of the area.

How to Qualify for a Land Loan

Each type of land loan comes with its own requirements and qualifications that borrowers must meet. The general factors that lenders take into consideration when you apply for a land loan include:

• Your credit score
• Your debt-to-income ratio
• How you intend to use the land
• Fulfillment of property checks, like zoning, land-use restrictions, boundary surveys, and access to roads and utilities

What to Expect When You Apply for a Land Loan

Buying land is a bit more complex than applying for a traditional mortgage. This is due to the requirements that come along with purchasing land, like checking zoning and land use restrictions, surveying boundaries, and checking access to utilities and roads.

The first and most important step when you want to get a loan to buy land is to find the right lender. Not all lenders offer land loans, and those who do vary in the types of loans they offer. A local bank or credit union is often the best fit if you want to purchase and develop land in your community.

When you’ve found the right lender and are ready to apply for a land loan, your next step will be understanding the qualifications and requirements and gathering the necessary paperwork.

Each type of land loan comes with its own requirements, but the general factors lenders take into consideration include:

• Your credit score
• Your debt-to-income ratio
• How you intend to use the land
• Fulfillment of property checks, like zoning, land-use restrictions, boundary surveys, and access to roads and utilities

Once the lender approves your application, you’ll agree to the loan terms and make a down payment. After that, you’ll be responsible for paying the loan back at the determined interest rate.

As with other types of loans, you can also expect to incur closing costs when you get a land loan. These out-of-pocket fees may include origination fees, stock fees, and fees for title work, survey, appraisal, and perc test.

Wondering About the Common Rates and Terms for Land Loans?

The rate and term of your land loan will affect how much you end up paying in the long run. Lenders commonly offer one of two types of loans: a balloon loan or a fixed-rate loan. A balloon loan usually offers a lower interest rate for a short term, but at the end of the term, the loan balance is due all at once. A fixed-rate loan allows you to lock in an interest rate for a long term, usually 20 to 30 years. This offers you more predictable payments.

Learn more about the Pros and Cons of Land Loans and get a detailed understanding of land loan types, property requirements, and land use.