It all depends on where you re buying and what you plan to use the land for.
Can i get a mortgage for land only.
You can improve your chances of getting a good deal if you help the lender manage risk.
The purpose and current use of the land can dictate the terms of the loan.
Loan for raw land.
As such there s a massive amount of variety from one land mortgage to the next.
Land loans come in all shapes and sizes and are unique compared to existing home loans.
In san jose california.
It may be possible to get longer term loans lower interest rates and a smaller down payment requirement.
Though they re more common in rural areas land mortgages can be found on urban sites too.
Lenders consider raw land as the least desirable collateral for all land uses.
People are much more likely to walk away from a land loan than a mortgage potentially leaving the lender with an unimproved parcel of land which they will have to sell to recoup their losses.
A piece of land is seen as riskier collateral for a loan than a property.
However va loans for both land and construction are quite hard to find.
If your land purchase is bundled with a construction mortgage you can likely get a less expensive amortizing mortgage at normal discounted mortgage rates.
Land loans are a very small slice of the market and tend to be riskier for lenders than mortgage loans says casey fleming a mortgage adviser with c2 financial corp.
As with a home mortgage you can obtain a land loan through a bank or a lender who will evaluate your credit history and the value of the land to determine if you re an eligible buyer.
That s why some qualified veterans will purchase a construction loan and once the construction is complete refinance the new home s mortgage into a va loan.
For this reason the type of land you want to buy will play a key role in the terms offered on your loan and whether you re approved.
Basically you can buy raw land or vacant lots with residential lending up to 160 acres with a collateral loan at bank prime rate plus something say prime 2.
The main difference between a land loan and a traditional mortgage is the lender s opinion of the collateral.
If you re buying raw land you re not necessarily going to get a bad loan.
Unimproved raw land is usually the hardest to finance or get with favorable terms.
Consequently land loans can be more difficult to obtain particularly if you don t have a definite plan in place to improve the property and increase.