Land Loan Calculator
Estimate the monthly payment on a land loan or lot loan from the land price, down payment, interest rate and term, including loans with a balloon payment.
Results
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Quick Answer
A land loan payment uses the same formula as a mortgage. For $100,000 of land with 30% down, you borrow $70,000; at 8.5% for 20 years the payment is $607.48 a month and total interest is $75,794. With a balloon, the payment is figured over a long term but the remaining balance is due early.
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Table of Contents
- Land Loan Calculator
- Quick Answer
- Related Calculators
- How This Land Loan Calculator Works
- How to Use the Land Loan Calculator
- Land Loan Payment Formula
- Key Terms
- Worked Example
- Real-Life Examples
- Land Loan vs Mortgage
- Monthly Payment per $10,000 Borrowed
- What Affects Land Loan Terms
- Common Mistakes to Avoid
- Frequently Asked Questions
- References & Sources
How This Land Loan Calculator Works
A land loan (or lot loan) pays for vacant land rather than a house. Because empty land is harder to sell than a home, lenders treat it as riskier: they often ask for 20% to 50% down, charge higher rates and offer shorter terms, and some use a balloon structure. Enter the land price, your down payment, the rate and term, and optionally the year a balloon payment falls due. The calculator gives your monthly payment, the loan amount, the cash you need at closing and the total interest or balloon amount.
Quick explanation: a bigger down payment and a shorter term cut the interest you pay.
- Raw land (no roads, power or water) usually needs the largest down payment.
- Improved lots with utilities often get better terms.
- Balloon loans have low payments but a large amount due at the end.
How to Use the Land Loan Calculator
- Enter the land price and your down payment percentage.
- Enter the interest rate and the loan term in years.
- If the loan has a balloon, enter the year it is due.
- Optionally enter closing costs.
- Press Calculate and read the payment, interest and cash needed.
Land Loan Payment Formula
- Loan amount: price × (1 − down payment %)
- Monthly rate: r = annual rate ÷ 12 ÷ 100; number of payments n = years × 12
- Payment: loan × r ÷ (1 − (1 + r)−n)
- Balance after k payments: loan × (1 + r)k − payment × ((1 + r)k − 1) ÷ r; with a balloon this whole balance is due at payment k
- Total interest: payment × n − loan
Key Terms
- Land loan: a loan to buy vacant land, also called a lot loan.
- Raw land: land with no roads, utilities or improvements.
- Balloon payment: a large final payment of the remaining balance.
- Seller financing: when the seller lends the buyer the money to buy the land.
- Perc test: a soil test to see if the land can support a septic system.
Worked Example
You buy a $250,000 lot with 25% down at 7.75%, with payments figured over 30 years and a balloon due after 5 years.
- Loan = $250,000 × 0.75 = $187,500
- Monthly payment = $1,343.27
- Balance due after 60 payments (the balloon) = $177,839.51
- Interest paid over the 5 years = $70,936
Most of the loan is still owed at the balloon date, so you must refinance, sell or pay it off then.
Real-Life Examples
- Raw land: $100,000 with 30% down at 8.5% for 20 years costs $607.48 a month.
- Small lot: $60,000 with 20% down at 9% for 15 years costs $486.85 a month.
- Seller financing: check the balloon amount before you agree.
- Compare offers: try different rates and down payments from several lenders.
Land Loan vs Mortgage
- Mortgage: for a home; as little as 3% to 5% down, terms up to 30 years, lower rates.
- Land loan: for vacant land; often 20% to 50% down, shorter terms and higher rates.
- Why: a house secures a mortgage well; empty land is harder for a lender to sell.
Monthly Payment per $10,000 Borrowed
Multiply by your loan amount ÷ 10,000.
| Rate | 10 years | 15 years | 20 years | 30 years |
|---|---|---|---|---|
| 6% | $111.02 | $84.39 | $71.64 | $59.96 |
| 7% | $116.11 | $89.88 | $77.53 | $66.53 |
| 7.5% | $118.70 | $92.70 | $80.56 | $69.92 |
| 8% | $121.33 | $95.57 | $83.64 | $73.38 |
| 8.5% | $123.99 | $98.47 | $86.78 | $76.89 |
| 9% | $126.68 | $101.43 | $89.97 | $80.46 |
| 10% | $132.15 | $107.46 | $96.50 | $87.76 |
| 11% | $137.75 | $113.66 | $103.22 | $95.23 |
What Affects Land Loan Terms
Lenders look at how usable the land is: road access, utilities, zoning, surveys, flood risk and whether you plan to build soon. A lot in a developed subdivision is lower risk than remote acreage. Your credit, income and the size of your down payment also matter. Options include local banks and credit unions, which know the area, Farm Credit lenders for rural and agricultural land, USDA programs for some rural buyers, and seller financing, where the owner acts as the lender, often with a balloon.
If you plan to build, a construction loan or a construction-to-permanent loan may replace the land loan later, and the equity in the land can count toward the down payment. Budget for property taxes, a survey, title insurance, perc tests for a septic system and the cost of bringing in utilities.
Common Mistakes to Avoid
- Expecting home loan terms. Land loans usually cost more and need more down.
- Ignoring the balloon. Plan how you will pay the balance when it is due.
- Skipping due diligence. Check access, zoning, utilities and flood zones before you buy.
- Forgetting carrying costs. Property tax and insurance continue while the land sits empty.
- Underestimating build costs. Utilities and site work can be expensive.
Frequently Asked Questions
Often 20% to 50%, depending on the land type, your credit and the lender.
Usually higher than mortgage rates, often by 1 to 3 percentage points.
Commonly 5 to 20 years, sometimes with a balloon payment.
With the standard amortization formula: loan × r ÷ (1 − (1 + r)^−n).
It can be harder than a mortgage; local banks, credit unions and Farm Credit lenders are good places to ask.
Often yes; equity in land you own can count toward a construction loan.
A loan with payments based on a long term but the remaining balance due after a few years.
Interest on land held for investment may be deductible in some cases; ask a tax professional.
No. Add your local property tax and any HOA fees.
References & Sources
| Source | Used For | Link |
|---|---|---|
| Consumer Financial Protection Bureau, What is a balloon payment? | How balloon loans work. | https://www.consumerfinance.gov/ask-cfpb/what-is-a-balloon-payment-when-is-one-allowed-en-104/ |
| Consumer Financial Protection Bureau, What is amortization? | How fixed payments split into interest and principal. | https://www.consumerfinance.gov/ask-cfpb/what-is-amortization-and-how-could-it-affect-my-auto-loan-en-873/ |