Specialized land loans for raw parcels, entitled development sites, and land banking. Higher equity requirements, shorter terms, and lenders who understand land-specific risk.

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50–65%

Max LTV

1–5 yr

Typical Term

7–12%

Rate Range

35–50%

Down Payment

UNDERSTANDING LAND LOANS

Why Land Financing Is Different

Land is the highest-risk asset class in commercial real estate lending. Unlike improved properties, raw land generates no income, has limited comparables, and carries entitlement and development risk. As a result, land loans require more equity, carry higher rates, and come with shorter terms than any other CRE product.

However, land is also where the greatest value creation happens. Buying the right parcel at the right price, securing entitlements, and developing or selling to a builder can generate outsized returns. The key is matching your land strategy with the right financing structure.

Raw Land Acquisition

Unimproved parcels with no entitlements. Highest risk, highest equity required (40–50% down). Best for land bankers with long time horizons.

Entitled Land Purchase

Parcels with approved zoning, permits, or development rights. Lower risk than raw land. Lenders offer better leverage (65–70% LTV) on entitled sites.

Land + Construction Package

Combine land acquisition with construction financing in one facility. Seamless transition from land closing to vertical construction without re-qualifying.

SBA 504 for Land

If your business will occupy the future building, SBA 504 can finance the land purchase as part of a combined land + construction project with just 10% down.

Seller Financing Option

Many land transactions include seller-carry financing with 20–30% down. We can help structure the purchase to maximize your negotiating leverage with sellers.

Development Site Subdivision

Financing for developers acquiring larger parcels for subdivision and lot sales. Release clauses allow individual lot sales while maintaining the master loan.

LAND LOAN STRUCTURES

Financing Terms by Land Type

Terms vary dramatically depending on the land’s development status. Entitled sites with approved plans get significantly better financing than raw, unzoned parcels.

Raw Land

Entitled Land

Land + Construction

Down Payment

40 – 50%

30 – 40%

20 – 35%

Max LTV

50 – 60%

60 – 70%

65 – 80% LTC

Rate Range

8 – 12%

7 – 10%

6.5 – 9%

Term

1 – 3 years

2 – 5 years

18 – 36 months

Amortization

Interest-only

IO or partial

IO during construction

Lender Type

Private / hard money

Bank / private

Bank / SBA

Best For

Land banking

Near-term development

Shovel-ready projects

FREQUENTLY ASKED QUESTIONS

Land Loan FAQ

Why do land loans require so much more equity?

Land generates no income, has volatile valuations, is illiquid compared to improved property, and carries development/entitlement risk. Lenders compensate for this by requiring 35–50% equity to protect against value decline during the hold period.

Can I use SBA loans to buy land?

Yes, but only if you plan to build an owner-occupied facility on the land. SBA 504 can finance land as part of a combined land + construction package with just 10% down. You cannot use SBA to buy land for speculation or investment purposes.

What makes entitled land more financeable?

Entitlements (approved zoning, permits, environmental clearance) remove the largest risk variable in land development. A site with approved plans for 200 apartment units is dramatically more valuable and financeable than a raw parcel with the same zoning potential.

How do I transition from a land loan to a construction loan?

Ideally, structure a combined land + construction facility from the start, so the land loan automatically converts to a construction draw facility when you break ground. If you have a standalone land loan, you will need to refinance into a construction loan when ready to build.

What due diligence should I complete before applying?

Phase I environmental, survey, geotechnical report, zoning verification, and a preliminary title report are standard. For development sites, also have architectural plans, cost estimates, and a development timeline. The more documentation you bring, the better your terms.

Is seller financing common for land deals?

Very common. Many land sellers prefer installment sales for tax advantages. Typical seller-carry terms: 20–30% down, 5–7% interest, 3–5 year balloon with 15–20 year amortization. We can help structure seller-carry proposals that benefit both parties.

Have a Development Site in Mind?

Our advisors source land financing from banks, private lenders, and SBA programs. We structure the right loan for your development timeline.

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Our 6 commitments to every borrower

Other lenders make promises.
We put them in writing.

Every commitment below exists because real borrowers got burned without it. We built BestLoanUSA to be the lender we wished existed.

Hidden Fees

No surprise charges at closing. Every cost disclosed upfront in writing before you commit.

24hr

Pre-Qualification

Know where you stand within one business day — not weeks or months of silence.

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One point of contact from application to closing. No handoffs, no ghosting, no runaround.

Day 1

Complete Checklist

Full document requirements on your first call. No mid-process surprises asking for "one more thing."

100%

Upfront Pricing

The rate and terms you're quoted are the rate and terms you close on. Period.

5 min

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Why borrowers switch to us

Five things your last lender should have done.

Borrowers don't come to us because lending is complicated. They come because someone else made it harder than it needed to be.

1
48 hours to clarity. You'll know exactly where you stand — not wonder for months.
2
Every dollar in writing. The rate and fees you see on day one are the ones you sign at closing.
3
One advisor, start to finish. No handoffs. No vanishing acts. One person who knows your deal.
4
Full checklist, first call. Every document listed upfront. No mid-process surprises.
5
We earn when you close. No upfront fees. Our only incentive is your funded deal.

“I’ve spent over a decade watching good borrowers lose money to a broken process. BestLoanUSA exists so that stops happening.”

Jason Kim

Managing Director, Commercial Lending

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