About the Land Loan Calculator
This land loan calculator estimates the monthly payment on a loan to buy raw land, a building lot or rural acreage. Land loans usually need a bigger down payment than a home mortgage — commonly 20% to 50% — carry higher interest rates and shorter terms, and are often written with a balloon payment, where the loan is amortized over a long period but the remaining balance falls due after a few years.
It is useful for buyers pricing a lot before building, investors comparing seller financing with a bank or credit union loan, and anyone who wants to know how large a balloon payment would be. Choose “no balloon” for a fully amortizing loan, or pick a balloon year to see the lump sum you would need to pay or refinance at that point.
The payment covers principal and interest only. Property tax on land is usually modest but still due, and there is typically no escrow account, so budget for it separately along with any survey, closing and development costs.
With the default inputs, the monthly payment is $650.87. Change any value above to recalculate instantly.
How to use the land loan calculator
- 1Enter the land price and the down payment percentage your lender requires.
- 2Enter the interest rate offered for the land loan.
- 3Choose the amortization period the payment is based on.
- 4Pick a balloon year if the loan has one, or leave it fully amortizing.
- 5Add closing costs and review the payment, balloon and total cost.
Formula and method
The loan amount L is the price minus your down payment. The monthly payment uses the standard amortization formula over the full amortization period of n months at monthly rate r, exactly like a mortgage.
With a balloon, you make that same payment for only k months, and the remaining balance — the loan grown with interest minus the value of the payments made — is due in one lump sum. Total interest counts only interest charged until the loan is paid off or the balloon is paid, and total cost adds the down payment, every monthly payment, the balloon and closing costs.
- M
- Monthly principal and interest payment
- L
- Loan amount (price − down payment)
- r
- Monthly interest rate (annual rate ÷ 12 ÷ 100)
- n
- Months in the amortization period
- k
- Months until the balloon is due
Worked examples
$100k lot, 25% down, 8.5% over 20 years
Borrowing $75,000 at 8.5% over 20 years costs $650.87 a month. You need $27,500 at closing ($25,000 down plus $2,500 costs), and pay about $81,208 in interest over the life of the loan.
20-year amortization with a 5-year balloon
The payment is the same $650.87, but after 60 payments about $66,095 is still owed and due as a balloon. Because the loan ends early you pay only about $30,147 of interest — as long as you can pay off or refinance the balloon.
Raw acreage, $60k, 40% down, 9.25% over 10 years
Raw land often needs a larger down payment: 40% of $60,000 is $24,000, leaving a $36,000 loan. At 9.25% over 10 years the payment is about $460.92 a month with roughly $19,310 of interest.
Frequently asked questions
How much down payment do you need for a land loan?+
Lenders often want 15% to 25% down on an improved lot with road access and utilities, and 30% to 50% on raw, undeveloped land. USDA and some local lenders have lower-down-payment programs for lots you will build a home on soon.
Why are land loan rates higher than mortgage rates?+
Vacant land produces no income, is harder to sell and is easier for a borrower to walk away from than their home, so lenders see more risk. Rates are commonly one to several percentage points above 30-year mortgage rates.
What is a balloon payment on a land loan?+
The payment is calculated as if the loan runs 15–30 years, but the loan is due after a shorter period such as 5 years. The remaining balance at that point is the balloon, which you pay in cash, refinance or cover by selling.
Where can I get a land loan?+
Local banks and credit unions, farm credit lenders, USDA programs and seller financing are the most common sources. Many national mortgage lenders do not offer raw land loans, and a construction-to-permanent loan can finance land and building together.
Is interest on a land loan tax deductible?+
Interest on land held as an investment may be deductible as investment interest, up to your net investment income. Land you are actively building a main home on can qualify as home mortgage interest for up to 24 months. Check with a tax adviser.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.