Land looks simpler than a house: cheaper, nothing to inspect, no roof to worry about. To a lender it’s the opposite, and the down payment they ask for shows it.
Why the down payment climbs
Vacant land earns no income, can’t be rented, and resells far more slowly than a house. If the lender has to take it back, it’ll wait a long time. Expect 25% or more, and sometimes half the price on an unserviced lot.
What changes everything
- Zoning and permitted use: residential, agricultural, recreational.
- Access from a road maintained year-round.
- Whether services are in place: water, sewer, electricity.
- Whether you intend to build, and on what timeline.
A serviced lot in a residential area has nothing in common with a wooded parcel you can’t reach in winter. The first interests several lenders. The second, almost none.
Land in an agricultural zone
In a protected agricultural zone, permitted use and acreage decide who can finance. A home with no farming operation gets a short list of lenders. Once there’s farming activity or a lot of acreage, the file slides toward agricultural financing, under different rules.
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