Why is a land loan different from other loans?

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For lenders, land loans are riskier because the loan’s collateral, the property, isn’t being used for housing, at least in the near term. Because of the lack of collateral, down payments and interest rates are higher for land loans than for mortgage loans.

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Are there different types of land loans?

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Yes, the type of loan you get depends on the property, as well as your plans for the land and the timing of construction.  Types of land loans include raw land, improved land and construction loans.

 

What do I need to know to apply for my land loan?

 

The first thing you'll need to know is how you plan to use the property.

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If you plan to start construction on your land right away, factors such as land use, zoning and access can be important factors in your land loan. 

 

On the other hand, your loan type can include raw land (meaning that the land has no improvements such as sewers, utilities, etc.), which can also affect your ability to take out the loan.

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Once you determine how the land will be used, you can work with MFC to determine the type of loan needed.