Land Loan Payment Calculator

A land loan is financing used to buy a plot of land without a house on it — raw land, an unimproved parcel, or an improved building lot. Because bare land produces no rental income and is harder for a lender to resell, land loans are riskier for banks than mortgages, so they come with higher interest rates, larger down payments (usually 20-50%) and shorter terms (typically 5-20 years).

Most lenders require 20-50% down on land, far more than a home mortgage. Raw, undeveloped land usually sits at the top of that range (35-50% or more), while an improved lot with utilities and road access may qualify closer to 20-25% down. A larger down payment lowers your loan amount, your monthly payment and your total interest.

Lenders see bare land as higher risk: it generates no income, its value is more volatile, and it is harder to sell in foreclosure than a house. To compensate, they charge a premium — often 1-3 percentage points above a comparable 30-year mortgage rate. For example, the same $97,500 loan over 15 years costs about $960/month at an 8.5% land rate versus about $876/month at a 7% mortgage-style rate.

Raw land is completely undeveloped — no utilities, no road access, no survey. An improved lot has some or all of that infrastructure in place. Lenders treat improved lots as lower risk, so they typically offer lower rates (around 8.5% versus 10% or more for raw land) and accept smaller down payments. On a $97,500 loan over 15 years, that rate gap is roughly $88/month in payment.

Land loans usually run 5-20 years, much shorter than the 15-30 year terms common for home mortgages. Shorter terms mean higher monthly payments but far less total interest. A $97,500 land loan at 8.5% costs about $2,000/month over 5 years, $960/month over 15 years, or $846/month over 20 years.

It uses the standard fully-amortizing loan formula: monthly payment = P × i(1+i)^n / ((1+i)^n − 1), where P is the loan amount, i is the monthly interest rate (annual rate ÷ 12) and n is the number of monthly payments. Loan amount = land price minus down payment. The same formula is used for mortgages and auto loans.

It is rare. Most banks cap land loans at 15-20 years because the collateral is riskier. If you need a longer payoff horizon, some borrowers use a balloon loan (e.g. 15-year amortization with the balance due in 5 years) and then refinance, sell, or build — each of which carries its own risk if values fall or credit tightens.

No. A mortgage calculator models a home loan: smaller down payment, 15-30 year terms, and usually principal + interest + taxes + insurance (PITI). This calculator models land loans: 20-50% down, 5-20 year terms, higher rates, no PITI, plus land-specific features like raw vs improved lot rate differences and balloon balances. For a house purchase, use our home loan calculator instead.

No. Unlike most mortgages, land loans are quoted as principal and interest only. Property taxes on the parcel and any insurance are billed separately and are not escrowed by the lender, so budget for them on top of the monthly payment shown here.

A balloon loan amortizes over a long schedule (say 15 years) but requires the entire remaining balance in one lump sum after a shorter period (say 5 years). For example, a $97,500 loan at 8.5% amortized over 15 years still owes about $77,438 after 5 years — that lump sum is the balloon. Borrowers plan to refinance, sell or build before it comes due.

Every extra dollar down reduces the loan amount one-for-one, which lowers both the payment and the total interest. On a $150,000 parcel at 8.5% over 15 years, 20% down ($30,000) gives a payment around $1,182/month, while 50% down ($75,000) drops it to about $739/month — roughly $443/month less, plus tens of thousands less in lifetime interest.

No. This tool provides estimates for planning purposes only — it is not professional financial, lending or legal advice. Actual loan terms, fees, taxes and eligibility depend on the lender, the parcel and your financial situation. Consult a licensed lender or financial advisor before borrowing.