# Land Loan Calculator Payments, cash to close, and the balloon balance on a raw land or improved lot loan. --- - **Canonical URL:** https://dothecalculation.com/calculators/land-loan-calculator - **Category:** Real Estate & Property - **Publisher:** Do The Calculation (https://dothecalculation.com) - **Cost:** Free, no account or sign-up required - **Privacy:** Runs entirely in the browser; inputs are never sent to a server - **Methodology:** https://dothecalculation.com/methodology --- ## Land Loan Payments, Balloon Balance, and Cash to Close Price a raw land or improved lot loan the way land lenders actually write them — larger down payments, higher rates, and a balloon well before the amortisation schedule ends. - Payment from the amortisation schedule, balloon shown separately - Cash to close including the down payment and closing costs - Total cost of the parcel once interest is counted ## Quick Answer — How Do Land Loan Payments Work? A land loan uses the ordinary amortisation formula, but with harsher inputs than a home mortgage: a bigger down payment, a rate typically **1 to 3 points above** mortgage rates, and often a **balloon** long before the schedule ends. • **Loan Amount** = Land Price − Down Payment • **Monthly Payment** = Loan × [ r(1+r)ⁿ ] ÷ [ (1+r)ⁿ − 1 ] • **Cash to Close** = Down Payment + Closing Costs • **Balloon Balance** = the remaining principal on the balloon date, due in one lump **Worked example:** a **$120,000** parcel with **25%** down (**$30,000**) leaves a **$90,000** loan at **75% LTV**. At **8.25%** over a **20-year** amortisation the payment is **$766.86** a month, total interest is **$94,046.18**, and total paid over the schedule is **$184,046.18**. Add **3%** closing costs (**$3,600**) and cash to close is **$33,600**, with a total cost of the land of **$217,646.18**. Down payments scale with how developed the parcel is. **Improved lots** with utilities and road access commonly need **20%**; **unimproved** land more; **raw** land with no services frequently **35% to 50%**. The less a lender can resell easily, the more of your own money it wants in front of its own. ## How to Use This Calculator: A $120,000 Improved Lot Enter the purchase price and the down payment percentage your lender requires. This is the input that changes most between land quotes and it drives everything else — at 25% down on $120,000 the loan is **$90,000** and the loan-to-value is **75%**. The rate is the second surprise for anyone coming from a mortgage. Land is harder to value, harder to foreclose on, and produces no income, so lenders price it above residential mortgages — commonly in the high single digits to low double digits depending on the parcel and the borrower. At **8.25%** on **$90,000** over 20 years the payment is **$766.86**, and the loan costs **$94,046.18** in interest across the full schedule, slightly more than the loan itself. Closing costs on land are quoted as a percentage of price and typically cover title work, a survey, recording, and lender fees. A **3%** allowance on $120,000 is **$3,600**, giving **$33,600** of cash to close. Survey cost is the item most likely to blow past a percentage estimate on an unplatted rural parcel — get a quote rather than assuming. Leave the balloon at zero if the loan genuinely amortises to term. Many do not, which is what the second example covers. If you intend to build, note that this is only the first of two financings: the [construction loan calculator](/calculators/construction-loan-calculator) prices the build, and lenders frequently roll the land into the construction loan rather than leaving two loans outstanding. ## A Second Example: A Raw Parcel With a Five-Year Balloon Raw land, financed the way a small local bank or credit union usually writes it. A **$65,000** parcel with **35%** down (**$22,750**) leaves a **$42,250** loan at **65% LTV**, priced at **9.5%** on a **15-year** amortisation with a **balloon at five years**. The payment is **$441.18** a month, calculated on the full 15-year schedule. Over that full schedule the loan would cost **$37,163.29** in interest, but it never runs that long. At the **60-month** balloon date, **$34,095.31** of principal is still outstanding and falls due in a single payment, having paid **$18,316.40** of interest along the way. That is the number that catches people out. After five years of payments totalling **$26,471**, only about **$8,155** of principal has been retired — the rest went to interest — and **$34,095.31** must be refinanced, paid off, or rolled into a construction loan. Cash to close was **$24,700** including **$1,950** of closing costs. The balloon is not a defect; it is how land lending is priced. But it makes the exit plan part of the underwriting rather than an afterthought. Buying land to build on within five years is a coherent plan because the construction loan refinances the balloon. Buying land to hold indefinitely against a five-year balloon is a plan that depends on credit conditions five years out, which is a genuine risk rather than a formality. ## Raw, Unimproved, and Improved Land **Raw land** has no utilities, no road access, and often no survey. It carries the highest rates and the largest down payments — frequently 35% to 50% — because a lender that forecloses is left holding something with a thin resale market and no income. Expect the shortest terms and the least flexibility. **Unimproved land** has some services or access but is not build-ready. Terms sit between raw and improved, and the specifics depend heavily on what is missing: a parcel needing only a well and septic is treated very differently from one needing a road. **Improved lots** are build-ready with utilities at the boundary and legal access. These attract the best land terms, commonly around 20% down, and are the closest thing to a conventional mortgage in this category. If you are choosing between parcels, the financing difference between raw and improved is often larger than the price difference, and it is worth pricing both before deciding which is cheaper. Two further things shape the quote regardless of category. **Zoning and buildability** matter enormously — a parcel with a failed perc test or no legal access may not be financeable at all. And **local lenders dominate this market**: land loans are usually portfolio products held by community banks and credit unions rather than sold to secondary-market buyers, which is why terms vary so widely and why the national mortgage comparison sites are of limited use. For a conventional purchase-with-house comparison, the [mortgage calculator](/calculators/mortgage-calculator) shows what the same money buys on an improved property, and the [loan calculator](/calculators/loan-calculator) handles generic amortisation. ## Limitations This calculator performs exact amortisation arithmetic on the figures you enter and assumes a fixed rate for the whole schedule. Many land loans are adjustable or are written as short-term notes that reprice at renewal, in which case the interest totals shown will not hold and the balloon balance is the more meaningful output. It does not model property taxes on the parcel, which are payable from day one and are rarely escrowed on a land loan, nor insurance, liability exposure, road maintenance agreements, HOA or property owners' association dues on platted lots, or the ongoing cost of keeping a rural parcel maintained and accessible. On a long hold these can be a material share of total cost and none of them appear in the payment. Closing costs are entered as a flat percentage of price, which is a rough approximation. Survey, title work on unplatted land, perc testing, and environmental review can all exceed a percentage estimate, particularly on rural parcels. The calculator also assumes the loan is available at the terms you enter, which for raw land is not a given — buildability, access, and zoning determine financeability before rate does. This is a general educational tool, not lending advice; get written quotes and consult a qualified professional before committing to a parcel. ## Related Calculators If the land is a step toward building, price the next stage with the [Construction Loan Calculator](/calculators/construction-loan-calculator) — lenders frequently roll the land balance into the construction facility, which is also the natural way to retire a balloon. For a comparison against buying an existing house, the [Mortgage Calculator](/calculators/mortgage-calculator) builds the full payment including taxes and insurance, and the [Loan Calculator](/calculators/loan-calculator) handles the generic amortisation if you want to test other structures. The [Loan Payment Guide](/blog/finance/loan-payment-guide) explains the formula behind all three. ## Frequently asked questions ### How much down payment do you need for a land loan? It depends on how developed the parcel is. Improved lots with utilities and road access commonly need around 20%; unimproved land more; raw land with no services frequently 35% to 50%. The harder a parcel is to resell after a foreclosure, the more of your money the lender wants ahead of its own. ### Are land loan rates higher than mortgage rates? Yes, typically by 1 to 3 percentage points. Land is harder to value, harder to sell after a default, and produces no income to service the debt, so lenders price the extra risk into the rate and shorten the term. ### What is a balloon payment on a land loan? The remaining principal falling due in one lump before the amortisation schedule ends. On a $42,250 loan at 9.5% amortised over 15 years with a five-year balloon, $34,095.31 is still outstanding at the balloon date after $26,471 of payments — because most of those payments were interest. ### How do you calculate a land loan payment? The same way as any amortising loan: Payment = Loan × [r(1+r)ⁿ] ÷ [(1+r)ⁿ − 1], where r is the monthly rate and n the number of months in the amortisation schedule. A $90,000 loan at 8.25% over 20 years is $766.86 a month. ### Can you get a 30-year land loan? Rarely. Land loan terms are usually shorter — often 10 to 20 years of amortisation, and frequently with a balloon at five or ten. Longer terms tend to appear only on improved lots from lenders with an appetite for that specific market. ### What closing costs apply to a land purchase? Title work, survey, recording fees, and lender charges, commonly estimated at a few percent of price. Survey is the item most likely to exceed a percentage estimate on unplatted rural land, and perc testing or environmental review can add more. Get itemised quotes rather than relying on a flat allowance. ### Does the land loan roll into a construction loan? Frequently, yes. Many construction lenders will pay off an existing land balance as part of the construction facility, treating the land equity as part of the borrower's contribution. That is also the cleanest way to retire a land loan balloon, which is why buying land to build on within the balloon period is a coherent plan. ### Why is raw land harder to finance than an improved lot? Because buildability is uncertain. A parcel without legal access, a passing perc test, or utility availability may not be developable at all, which makes it very difficult to value and very slow to sell. Many lenders will not write raw land at any rate, so financeability is settled before pricing is. ## Related concepts - **Improved vs Raw Land** — Whether a parcel has utilities, legal access, and a passing perc test. It drives the down payment, the rate, and whether financing exists at all. - **Balloon Balance** — Principal still outstanding when a short-term note matures against a longer amortisation schedule. Usually the largest single number in a land deal. - **Portfolio Lending** — Land loans are typically held by the originating bank rather than sold on, which is why terms vary so much between local lenders and why shopping matters. ## Related guides - [Loan Payment Guide: Formula, Interest, and Total Cost](https://dothecalculation.com/blog/finance/loan-payment-guide) — Learn how fixed loan payments are calculated, why term length changes total interest, and how the DTC loan calculator matches amortization math. - [How to Use Do The Calculation Calculators: A Practical Step-by-Step Guide](https://dothecalculation.com/blog/site-guides/how-to-use-calculators) — Learn the fastest reliable workflow for using Do The Calculation calculators, reading results, checking formulas, and using save, print, share, and export actions correctly. ## Related calculators - [Seller Financing Amortization Calculator](https://dothecalculation.com/calculators/seller-financing-calculator) — Model owner-financed loan amortization schedules, balloon payments, and installment sale capital gains tax benefits for seller financing deals. - [Real Estate Closing Costs Estimator](https://dothecalculation.com/calculators/closing-cost-estimator) — Estimate real estate closing costs, including buyer and seller expenses, prepaid items, reserves, and total cash needed to close on a home. - [Construction Loan Calculator](https://dothecalculation.com/calculators/construction-loan-calculator) — Interest on the drawn balance month by month, the interest reserve, and the permanent payment after conversion. - [Student Loan Calculator](https://dothecalculation.com/calculators/student-loan-calculator) — Estimate student loan monthly payments, total interest paid, and payoff timeline based on your balance, rate, and repayment term. - [Airbnb ROI Calculator](https://dothecalculation.com/calculators/airbnb-roi-calculator) — Calculate Airbnb rental ROI, including projected monthly cash flow, cap rate, and cash-on-cash return, to evaluate short-term rental profitability. - [Biweekly Mortgage Payment & Payoff Accelerator](https://dothecalculation.com/calculators/biweekly-mortgage-payoff-calculator) — Compare biweekly versus monthly mortgage payment schedules to calculate how much faster you pay off your loan and total interest saved. --- _This calculator performs exact amortisation arithmetic on the figures you enter and assumes a fixed rate for the whole schedule; many land loans are adjustable or reprice at renewal, in which case the balloon balance is the more meaningful output. It excludes property taxes, liability insurance, road maintenance agreements, association dues, and the ongoing cost of maintaining a parcel, none of which appear in the payment. Closing costs are a flat percentage estimate that survey and title work on unplatted land can exceed. This is a general educational tool, not lending advice — get written quotes and consult a qualified professional before committing to a parcel._ --- _Source: [Do The Calculation](https://dothecalculation.com/calculators/land-loan-calculator). Quote freely with attribution and a link to this page._