Finding a lender willing to finance raw or undeveloped land is harder than most people expect. Unlike a standard home purchase, land loans come with higher interest rates, stricter qualification requirements, and far fewer lenders to choose from. That combination makes picking the right lender one of the most important decisions you’ll make in the process.
Whether you’re buying a residential lot, a rural parcel, or agricultural acreage, the good news is that solid options exist. We reviewed the top banks and credit unions offering land loans today, looking at loan-to-value ratios, down payment requirements, term lengths, and state availability to help you find the best fit.
10 Best Banks for Land Loans
Before applying with any lender on this list, confirm they offer loans in your state and review their eligibility requirements carefully. Terms, rates, and availability can change, so always check directly with the lender before moving forward.
1. Old National Bank
Old National Bank offers flexible lot and land loans for residential properties up to 50 acres across Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, North Dakota, Tennessee, and Wisconsin.
2. Atlantic Union Bank
Atlantic Union Bank is a strong option if you’re purchasing land in Virginia or surrounding states.
3. Randolph-Brooks Federal Credit Union
Randolph-Brooks Federal Credit Union offers land loans for buyers looking to secure property, whether they plan to build soon or further down the road.
4. America First Credit Union
America First Credit Union, based in Riverdale, Utah, offers consumer-friendly lot loans for borrowers planning to build in Utah, Nevada, Arizona, Idaho, or New Mexico.
5. Mountain America Credit Union
Mountain America Credit Union offers lot and land loans for borrowers planning to build whether that’s in the near term or further down the road.
6. Farm Credit Services of America
Farm Credit Services of America is part of the nationwide Farm Credit System and serves borrowers in Iowa, Nebraska, South Dakota, and Wyoming.
7. Banner Bank
Banner Bank offers lot loans for borrowers planning to build in the near future, financing both improved and unimproved land.
8. Alpine Bank
Alpine Bank has been serving Colorado for over 50 years and offers land and construction loans tailored to buyers looking to secure property and build a home.
9. First Bank & Trust
First Bank & Trust, based in Virginia, offers land and lot loans for buyers who want to secure property before building.
10. First Hawaiian Bank
First Hawaiian Bank offers land loans for buyers who are ready to purchase but not yet prepared to build.
What Are Land Loans?
Land loans are financing products designed specifically for purchasing land, whether for development, investment, agriculture, or recreation. They work similarly to other loan types but come with some key differences that borrowers should understand before applying.
Because lenders view land as riskier than improved property, land loans typically carry higher interest rates and stricter qualification standards compared to traditional home mortgages.
A borrower is more likely to walk away from a vacant parcel than from a home they’re living in, and that default risk gets priced into the loan. Rates on land loans generally range from around 4% to 10% or higher depending on the land type, your credit profile, and the lender.
Types of Land
Your chances of getting approved for a land loan, and the terms you’ll qualify for, depend heavily on the type of land you want to buy. Lenders view each category differently when assessing risk.
Raw Land
Raw land is completely undeveloped, with no buildings, utilities, roads, or drainage. It’s the hardest type of land to finance because lenders view it as the highest risk of abandonment.
If you’re applying for a raw land loan, expect to need a detailed development plan, a higher down payment, and a higher interest rate. The purchase price may be lower, but the borrowing costs will be steeper.
Unimproved Land
Unimproved land sits somewhere between raw land and a ready-to-build lot. It may have limited access to utilities or infrastructure, but typically needs significant work before construction can begin.
Lenders still consider it risky, but less so than raw land. A strong credit score and a solid development plan will carry a lot of weight in these applications.
Improved Land
Improved land has road access, water, and utility hookups already in place. Because it requires less work before building can begin, lenders view it as significantly less risky. That translates to lower interest rates, lower down payments, and more lender options.
For most people planning to build a home, improved land is the most practical starting point since you can move into construction without a lengthy prep phase first.
How to Apply for a Land Loan
Applying for a land loan follows a straightforward process, but preparation matters a lot. Here’s what the process typically looks like.
- Find a plot: Start by identifying the land you want to buy, and keep a couple of backup options in mind. If financing falls through on your first choice, having alternatives ready saves time.
- Create a development plan: Put together a detailed plan that includes your intended use, an estimated timeline, and a projected cost range. Lenders want to see that you’re serious and have thought through the project. The more specific your plan, the better your negotiating position.
- Compare lenders: Not every lender works with every land type or every state. Take time to get quotes from multiple lenders and use pre-approval offers to negotiate better terms.
- Complete the application: Once you’ve chosen a lender, you’ll typically need to provide your development plan, personal financial information, a credit check, and details about the property including zoning, utility access, and any land use restrictions.
Alternative Land Financing Options
If a traditional land loan isn’t the right fit, several other financing options are worth exploring.
USDA Loans
The U.S. Department of Agriculture offers Section 523 loans for purchasing land to develop and Section 524 loans for financing new construction by contractors. USDA loans require no down payment and offer low interest rates, but they must be repaid within two years and are limited to rural areas where you plan to build a primary residence.
FHA Loans
FHA loans are not available for land purchases alone, but they can be used when buying land with the intention to build immediately. They sometimes pair with construction loans and may offer lower down payment requirements for eligible borrowers.
Home Equity Loans
If you already own a home and have built up equity, a home equity loan lets you use that equity as collateral to fund a land purchase. It acts as a second mortgage and may come with more competitive rates than a standalone land loan.
Cash-Out Refinancing
Homeowners can refinance their existing mortgage at a new rate and pull out a lump sum based on their home’s equity. That cash can then be applied toward a land purchase. Cash-out refinancing makes the most sense when you can secure a rate that improves your overall mortgage picture.
SBA 504 Loans
The Small Business Administration’s 504 loan program is designed for purchasing real estate for business purposes. The SBA typically covers 40% of the purchase value, the borrower contributes 10%, and a separate lender covers the remaining 50%. Terms and rates vary by lender. This option is not suited for personal land purchases, but works well for business-related land acquisition.
Seller Financing
Sometimes the landowner is willing to finance the sale directly, also known as a land contract. This can work in your favor if you struggle to qualify for traditional financing, but seller financing typically comes with higher interest rates and shorter repayment terms than what a bank would offer.
Bottom Line
Land loans are not one-size-fits-all products. The best lender for you depends on where you’re buying, what type of land you’re purchasing, and how soon you plan to build. Some lenders specialize in agricultural and rural properties, while others focus on residential lots with flexible construction timelines.
Before you apply, take the time to compare lenders on down payment requirements, loan-to-value limits, interest rates, and state availability. Having a clear development plan ready before you approach any lender will also work in your favor. With the right preparation and the right lender, land financing is manageable and a solid first step toward building something on your own terms.
