Land Loan Calculator: Estimate Your Payments in 3 Easy Steps

A Land Loan Calculator is a valuable asset that can be utilized for a variety of purposes including building a home, starting a farm, or commercial development. However, purchasing land requires significant upfront capital that not everyone can access. This is where land loans come into play. 

A land loan is a mortgage specifically intended for the purchase of vacant land. Like a traditional mortgage, the land itself serves as collateral on the loan. Land loans allow buyers who lack the cash to pay full price to spread payments out over time. Both individuals and developers commonly utilize land loans.

While there are specialized lenders that only offer land loans, you can also obtain land financing from most banks and credit unions. This guide covers everything you need to know about getting approved for and using a land loan. We’ll also introduce an easy land loan calculator tool to determine estimated payments. Keep reading to learn more!

Determine Your Budget 

Determining your budget is one of the most important steps when considering purchasing land. You’ll need to take a close look at your current finances and assess how much you can realistically afford to spend. Here are some key factors to consider:

  • Income – Your income is the baseline for determining your budget. Consider your gross annual income from your job, business, investments or other sources. Be realistic about your income – don’t base it on an exceptional year or potential future earnings. 
  • Savings – The more cash you have on hand already, the better – it provides a cushion for your land purchase. As a rule of thumb, you should have at least 20% of the purchase price saved as a down payment. More is ideal to cover costs like due diligence and closing.
  • Debt obligations – Look at your current monthly debt payments like car loans, student loans, credit cards, etc. These impact how much you can afford to budget for a land loan payment each month. Aim to keep your total monthly debt under 36% of your gross monthly income.
  • Other expenses – Don’t forget regular living expenses when determining your budget. Make a list of all your typical monthly costs – mortgage/rent, utilities, food, gas, insurance, healthcare, entertainment, etc. This gives you a realistic picture of your available budget for a land purchase.

In addition to the purchase price, factor in costs like:

  • Due diligence – inspection fees, title search, etc can cost 1-5% of the purchase price.
  • Closing costs – around 2-5% of the loan amount, including lending fees, title fees, and recording fees. 
  • Land prep – initial roads, grading, and utilities access can be 10-15%+ of land cost.

It’s important to accurately estimate both the purchase price and additional costs so you buy a property that fits comfortably within your overall budget. Being realistic upfront prevents being house-poor or overextended down the road. Consult a land financing expert for help determining the right budget for your goals and finances.

Get Preapproved Overview

Getting preapproved for a land loan calculator is an important step in the land-buying process. Here are some key benefits of getting preapproved:

  • Shows sellers you are a serious buyer. Sellers will often take a preapproved buyer more seriously, since they know you have already been vetted by a lender. This can give you an edge in negotiations.
  • Locks in an interest rate. Interest rates fluctuate frequently. By getting preapproved, you lock in a rate with the lender for a set period of time. This protects you from rates going up before you purchase.
  • Determines affordability. The pre-approval process involves the lender analyzing your finances to determine the loan amount you qualify for. This gives you a clear sense early on of what you can afford.
  • Speeds up the process. Much of the documentation and credit checks needed to secure financing are done upfront during preapproval. This makes the final loan approval process faster after finding a property.

Get Preapproved

When evaluating land loan calculator applicants, lenders primarily look at your credit score, income, assets, and down payment amount. Specifically, they want to see:

  • A credit score of at least 620 or higher. The higher your credit score, the better. This shows lenders you are responsible for credit and debts.
  • Stable income. Lenders will ask for tax returns, pay stubs, or other documentation to verify your income is steady and sufficient to make loan payments.
  • Sufficient assets and cash reserves. Lenders want to see you have adequate savings and other assets to draw from if needed. This provides a safety net if your income is disrupted.
  • Down payment of around 10-25%. The down payment reduces the loan amount needed. Lenders prefer larger down payments as it lowers their lending risk.

By understanding lenders’ key criteria, you can get your finances in shape before applying. Having your financial house in order will make the preapproval process go much more smoothly.

Find the Right Property

When looking to purchase land, you’ll need to find the right property that meets your goals and budget. There are a couple of routes you can take to search for land:

Work with a Real Estate Agent

One of the best ways to find land is to work with an experienced real estate agent who specializes in land transactions. A good agent will:

  • Have access to land listings that aren’t available publicly. Agents have access to the Multiple Listing Service (MLS) which contains property listings in a given area. 
  • Be knowledgeable about the local land market. An agent will know what types of land are in demand, current prices, and up-and-coming areas.
  • Handle negotiations on your behalf. Real estate agents act as intermediaries between buyers and sellers, negotiating the purchase price and terms.
  • Assist with due diligence. Agents can help review property disclosures, coordinate inspections, and guide you through the closing process.

When interviewing real estate agents, look for someone experienced in land transactions and farms/ranches if relevant. Ask about their current and sold land listings to get a sense of their experience. 

Search for Land Yourself 

You can also search for land on your own using these resources:

  • LandWatch – National land listing site with over 200,000 rural properties for sale. You can search by state, price, acreage, and property type.
  • Lands of America – Features over 3 million acres of rural property for sale across the U.S. Search by county, state, price, and more.
  • – Main real estate site with a land and lot subsection. Allows you to search land by location and filter by lot size. 
  • Zillow – Popular real estate marketplace with a dedicated land and farm section. Search by city, state, and property details. 
  • Local real estate listings – Check local MLS real estate sites for land and acreage listings in your desired location. You can find these through a simple search.
  • Signs – Look for physical for-sale signs on properties themselves, especially in rural areas. Jot down the listing agent’s contact info.
  • Auctions – Monitor auction sites like for upcoming land auctions in your state.

When searching on your own, verify property details like acreage and boundaries. Drive by properties you’re interested in and get preapproved for financing so you can move quickly on a property if needed.

Due Diligence

Conducting thorough due diligence is a critical step when purchasing land. Rushing through this process or skipping it altogether can lead to nasty surprises down the road. Take the time upfront to research the property inside and out to ensure it aligns with your plans and to avoid any costly mistakes.

Some key elements of due diligence include:

  • Title search – Research the title history to ensure there are no claims against the property, undisclosed heirs, or other issues with ownership rights. Look back several decades for maximum protection.
  • Surveys – Have new boundary and topographical surveys conducted to establish exact property lines and identify any encroachments. Compare against existing plat maps.
  • Inspections – Hire appropriate professionals to inspect for issues with soil stability, contamination, drainage, flood risk, easements, presence of wetlands or endangered species, and more based on property location. 
  • Permits and zoning – Verify with the local zoning office that your intended use of the property (residential, commercial, agricultural, etc.) is permitted. Check when permits will be required.
  • Mineral rights – Determine if mineral rights are included or excluded from the sale. This affects the ability to profit from resources under the land.
  • Easements and access – Check for utility easements that may restrict the building. Confirm legal access to the property.
  • Homeowners associations – Research any existing or proposed HOAs and understand their rules, fees, and level of control over the property.

Conducting thorough due diligence takes time but can prevent you from buying a “money pit” piece of land or one that can’t be used as intended. Don’t skip this step.

Make an Offer

When you’ve found the land you want to purchase, it’s time to make an offer. There are several key factors that will impact how much you offer:

  • List price – While you’ll want to offer under the list price, don’t lowball so much that the seller won’t take your offer seriously. Consider recent comparable sales in the area to determine a fair price.
  • Appraisal – If you can get a professional appraisal done before making an offer, it will give you a solid ground to stand on in terms of the property’s true market value. This prevents overpaying.
  • Inspection findings – If you opt to do an inspection prior to making an offer, any repairs or issues found will enable you to make a lower offer.
  • Financing terms – A strong, preapproved financing package can make your offer more appealing than those dependent on securing financing. Cash offers also tend to be favored.
  • Urgency of sale – If the sellers need to sell quickly, they may be more motivated to accept a lower offer. But don’t assume, it depends on their circumstances.
  • Inclusions – Outline exactly what you want to include in the sale – mineral rights, water rights, sheds, fencing, etc.

Earnest Money

Once you’ve determined your offer price, you’ll submit it along with earnest money to show you are serious. This money is a deposit that goes toward the purchase price once the deal closes. If the deal falls through, you may lose the earnest money depending on the contingency clauses in your contract. 

Include contingency clauses to protect yourself like financing approval, inspection results, and appraisal value. They enable you to back out and get your earnest money returned if any stipulations aren’t met. Make your offer time-limited so the sellers must respond within a certain timeframe.

Submitting a competitive offer requires understanding how to value the property and negotiate smartly with contingencies to safeguard your investment. With the right preparation, you can confidently make an offer and take the next steps toward land ownership.

Secure Financing

After your offer is accepted, it’s time to secure financing for your land purchase. The Land Loan Calculator application process is similar to applying for a traditional mortgage but with some key differences. 

You’ll need to provide the lender with documentation to prove your creditworthiness, such as:

  • Tax returns for the past 2 years
  • W-2s and paystubs 
  • Bank statements
  • Debt-to-income ratios
  • FICO credit score

The lender will also want to see details about the property, including:

  • The purchase agreement 
  • Appraisal 
  • Phase 1 environmental report
  • Survey/plat map
  • Title work

The loan amount will be based on the appraised value of the raw land. Expect to put down 20-25% as a down payment. Land loans typically have higher interest rates and shorter repayment terms than traditional mortgages.

Work closely with your lender throughout the process to ensure you have all the required paperwork. It’s key to get preapproved early so there aren’t any surprises that could delay closing. If you have a solid application, you should be able to secure financing in time to close on schedule.

Close on the Property

The final step in purchasing land is closing on the property. This is when you officially take ownership and possession of the land. 

The Closing Process

During closing, the buyer and seller sign all the final paperwork, and money is exchanged. This usually happens at a title company or attorney’s office. 

First, the buyer will do a final walkthrough of the property to ensure nothing has changed. Next, the buyer will wire their down payment funds and the final amount due to the title company. 

The seller will provide the deed and any other necessary documents. The title company will then prepare a settlement statement outlining all costs for both parties. 

Once everything is signed and payments clear, the deal is finalized. The title company will record the deed at the county clerk’s office to transfer ownership. They will distribute keys, deeds, and other paperwork to the appropriate parties.

Closing Costs

Closing costs vary, but buyers can expect to pay:

  • Down payment – This is the upfront percentage you pay on the purchase price. A standard minimum is 20%.
  • Title fees – Covers title search, preparation, insurance, etc. Usually around $500. 
  • Recording fees – To officially record the deed, around $100.
  • Transfer taxes – paid to the state/county, varies by location. Could be 1-2% of purchase price.
  • Appraisal fees – If getting a mortgage, expect to pay $400-500 for an appraisal.
  • Inspections – If you have any inspections done, those costs are due at closing.
  • Attorney fees – Some buyers hire a real estate attorney to review documents. The average is $500.
  • Lender fees – Origination and processing fees if financing. Varies by lender.

It’s important to budget accordingly and not be caught off guard by these fees at closing. Ask your real estate agent for an estimated closing cost worksheet.

Use the Land

Land Loan Calculator can be a great investment if used properly. Here are some potential uses for vacant land:

Building a Home or Other Structure

One of the most common uses for vacant land is to build a home, either as a primary residence or a vacation home. You could also build a garage, workshop, storage building, or other useful structure. Building will require permits, architectural plans, and contractors. Ongoing costs will include property taxes, insurance, utilities, and maintenance.

Farming or Raising Livestock

Turning vacant land into farmland takes work to clear and prepare the land, but can be very rewarding. Consider growing crops, trees, vines, or raising livestock like cattle, chickens, goats, etc. You’ll need agricultural expertise, equipment, irrigation, and marketing for any products. Expect costs like seed, tools, fencing, taxes, etc.

Recreational Use 

Using vacant land for recreational purposes can be relatively low cost. Options include hiking, camping, hunting, stargazing, riding ATVs, or just enjoying nature. You may want to build things like trails, a pond, fire pit, etc. Costs will include any recreational equipment and taxes.

Leasing the Land

You could lease the land to others for many possible uses – farming, grazing animals, recreational purposes, storage space, etc. This provides income to offset the ongoing costs of taxes, insurance, maintenance, etc. Promote vacant land leases through classified ads or land listing services.

Holding for Appreciation 

You may choose to simply hold onto vacant land as an investment. Even unused land often increases in value over time as surrounding areas develop. You can then sell the land for a profit. In the meantime, costs are limited to property taxes, insurance, and maintenance fees.

Land Development

Alternatively, you may see potential in developing the land. Options include subdividing lots, building infrastructure for a residential community or commercial site, or preparing the land for industrial use. This requires significant investment but can yield major returns from land sales or real estate development.

Whatever your plans, evaluate costs and returns to maximize the value of your vacant land investment. With vision and effort, an empty plot can be transformed into a useful asset.

The Land Loan Calculator

The land loan calculator is a useful tool for estimating your monthly loan payment when financing land. This calculator allows you to input details like the purchase price, down payment amount, interest rate, and loan term to calculate your estimated monthly payment. 

To use the land loan calculator:

  • Enter the purchase price of the land you want to finance. This is the total cost of the property.
  • Input your planned down payment amount. The down payment reduces the amount you need to finance. Generally, lenders require 10-20% down.
  • Select your desired loan term in years. Typical land loans are 10-30 years. Longer terms have lower monthly payments. 
  • Input the interest rate you expect to get from lenders. Rates vary based on your credit, the lender, and current market rates.
  • Click “Calculate” and your estimated monthly payment will be displayed. This is your principal and interest payment.

Here’s an example calculation:

  • Purchase Price: $150,000
  • Down Payment: $30,000 (20%)  
  • Loan Amount: $120,000
  • Loan Term: 20 years
  • Interest Rate: 5%
  • Monthly Payment: $719

In this example, if you purchase land for $150,000 with a 20% down payment, a $120,000 loan over 20 years at 5% interest would equal a $719 principal and interest payment per month.

Experiment with the inputs to see payment estimates at different loan amounts, terms, and interest rates. This gives you an idea of what is affordable based on your budget. The land loan calculator simplifies the process of estimating your potential financing costs.

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