Land down payments are usually 20 to 30 percent of the purchase price, but can range from 10 to 50 percent depending on the lender, the property type, and whether the land is raw or improved
Land is harder to finance than a house, so lenders ask for more money upfront. A house purchase might require 3 to 20 percent down; raw land (undeveloped, no utilities, no structures) typically requires 20 to 30 percent. If the land has utilities, a driveway, or is in a developed subdivision, some lenders will accept 15 to 20 percent. Lenders see raw land as riskier because it has no income-producing use and fewer buyers if they need to foreclose.
The exact amount depends on three things: the lender's rules, the land's condition, and your credit profile. A bank or credit union may demand 30 percent; a portfolio lender (one that keeps the loan instead of selling it) may accept 20 percent. If you have strong credit and a solid down payment history, you may negotiate lower. If your credit is below 700 or you have recent late payments, expect to pay 30 percent or more.
Key Takeaways
- Raw land typically requires 20 to 30 percent down; improved land with utilities and access may require 15 to 20 percent.
- Lenders set their own minimums, so calling three to five lenders before you make an offer tells you what is actually available to you.
- Your credit score, debt-to-income ratio, and cash reserves all affect whether a lender will accept 20 percent or demand 30 or 40 percent.
- Some lenders specialize in land loans and accept lower down payments than traditional banks, but charge higher interest rates.
- The down payment is separate from closing costs, which for land typically run 2 to 5 percent of the purchase price on top of what you put down.
Why land requires more money down than a house
A lender who forecloses on a house can sell it quickly because thousands of buyers want to live there. A lender who forecloses on raw land may wait months or years to find a buyer, and the land may sell for less than the loan amount. That risk is why lenders protect themselves by asking for a larger down payment upfront.
Raw land also has no income to show. A rental property generates rent that can cover the loan payment; land generates nothing until someone builds on it or develops it. Lenders see this as a sign that you are betting on future value rather than current use, which is a riskier bet than financing a home someone will live in tomorrow.
Improved land—land with a driveway, utilities run to the property line, or a lot in a platted subdivision—is easier to finance because it is closer to being buildable. Some lenders will finance improved land at 15 to 20 percent down because the risk is lower and the resale pool is larger.
How lender type affects your down payment requirement
Traditional banks and credit unions usually require 25 to 30 percent down on raw land. They sell most loans to Fannie Mae or Freddie Mac, which have strict rules about land loans. These lenders want strong credit (usually 700 or above), a low debt-to-income ratio, and proof that you have cash reserves after closing.
Portfolio lenders keep the loans they make instead of selling them, so they can set their own rules. Many portfolio lenders will accept 20 percent down on raw land and may be more flexible about credit score or recent financial hiccups. The trade-off is a higher interest rate—often 0.5 to 1.5 percent above what a bank would charge.
Specialized land lenders exist in most states and focus only on raw land or rural property. They may accept 10 to 20 percent down but typically charge the highest interest rates of all. Shop these lenders if you have been turned down by banks or if your land is in a rural area where traditional lenders do not operate.
What affects the down payment amount a lender will accept
| Factor | Impact on Down Payment |
|---|---|
| Credit score 750+ | May lower requirement to 20% on improved land |
| Credit score 700–749 | Typically 25–30% on raw land |
| Credit score below 700 | 30–40% or loan denial |
| Debt-to-income ratio below 36% | Strengthens offer; may lower down payment |
| Debt-to-income ratio 36–50% | Requires higher down payment to offset risk |
| Cash reserves (6+ months of payments) | Lender views as lower risk; may accept 20% |
| Raw land, no utilities | 20–30% or higher |
| Improved land with utilities and access | 15–20% |
| Land in platted subdivision | 15–20% |
Your credit score is the first filter. Lenders pull your credit report and see your payment history, outstanding debt, and any collections or late payments. A score of 750 or above opens doors to lower down payments and better rates. A score between 700 and 749 is acceptable but usually means 25 to 30 percent down on raw land. Below 700, most traditional lenders will ask for 30 to 40 percent or decline the loan.
Your debt-to-income ratio (total monthly debt payments divided by gross monthly income) tells a lender whether you can afford the new loan payment on top of what you already owe. Most lenders want this ratio below 43 percent. If yours is 36 percent or lower, you are in a strong position to negotiate. If it is 43 to 50 percent, expect a higher down payment requirement because the lender sees less room in your budget.
Cash reserves matter more for land loans than for house loans. Lenders want to see that you have money set aside after closing—typically three to six months of the new loan payment plus your other debt payments. If you have strong reserves, a lender may accept 20 percent down instead of 30 percent because they know you can weather a financial bump.
Down payment versus closing costs: what you actually need to save
The down payment is only part of what you pay at closing. Closing costs for a land purchase typically run 2 to 5 percent of the purchase price and cover the lender's appraisal, title search, title insurance, survey, and attorney fees. On a $100,000 land purchase with 25 percent down, you would pay $25,000 down plus $2,000 to $5,000 in closing costs—a total of $27,000 to $30,000 out of pocket.
Some lenders allow you to roll closing costs into the loan, which means you borrow the money instead of paying it upfront. This reduces the cash you need at closing but increases the total amount you owe and the interest you pay over time. Ask your lender whether this option is available and what the trade-off is in monthly payment and total interest.
Budget for a survey if the land does not have a recent one. A survey costs $300 to $1,500 depending on the size and complexity of the property and is often required by the lender before they will fund the loan. Some sellers provide a survey as part of the sale; ask before you make an offer.
How to find out what down payment a lender will actually accept
Do not assume you know the answer. Call three to five lenders—banks, credit unions, and at least one portfolio or specialized land lender—and give them the same information: the purchase price, the land type (raw or improved), your credit score, your debt-to-income ratio, and your cash reserves. Ask each one what down payment they would require and what interest rate they would offer.
The answers will vary. One lender may say 30 percent; another may say 20 percent. One may offer 7 percent interest; another may offer 7.5 percent. The difference between lenders can save or cost you thousands of dollars over the life of the loan, so shopping is worth the phone calls.
Once you know what lenders will accept, you can make an offer on the land that reflects what you can actually finance. If all lenders require 25 percent down and you only have 20 percent saved, you know you need to either save more, negotiate a lower price, or wait. Making an offer you cannot finance wastes everyone's time and damages your reputation with sellers and agents.
Frequently Asked Questions
Can I put down less than 20 percent on land?
Yes, but it is uncommon. Some portfolio lenders and specialized land lenders accept 10 to 15 percent down if you have excellent credit and strong cash reserves. Expect to pay a higher interest rate and possibly a higher monthly payment to offset the lender's increased risk. Call lenders directly to ask; most will not advertise this option.
Does the down payment change if I plan to build on the land right away?
Not usually. Most lenders treat raw land the same way whether you plan to build immediately or hold it for five years. However, if you have construction financing lined up or a builder's contract in hand, mention it to the lender—some view this as lower risk and may accept a smaller down payment or offer a better rate.
What if I am buying land with a partner or family member?
Both of you will be on the loan, and the lender will evaluate both credit scores and both incomes. If one person has weak credit, it may pull down the approval or increase the down payment requirement. Discuss this with the lender before you make an offer so there are no surprises at closing.
Can I use a gift for the down payment?
Yes, but the lender will require a gift letter from the person giving you the money, stating that it is a gift and not a loan you have to repay. The lender wants to know your true debt obligations, so they need proof that this money does not come with a repayment expectation. Ask your lender for their gift letter template.
What happens if I cannot save the full down payment before I find land I want to buy?
You have three options: negotiate a lower price so the down payment is smaller in dollars, ask the seller to carry back a second mortgage (the seller finances part of the purchase), or wait until you have saved more. Asking the seller to carry back part of the financing is common in land sales and can lower your down payment requirement, though the seller may charge a higher interest rate than a bank would.