Land Loan Calculator
Estimate the monthly payment, total interest, and amount financed on a land or lot loan.
Same math as a mortgage
Land loans amortize with the standard fixed-rate formula — only the rate, term, and down payment differ.
Principal and interest only
Property taxes, insurance, and closing costs are not included — budget for those separately.
What is a land loan?
Financing the lot, not the house
A land loan finances the purchase of a bare lot or parcel — land with no house on it yet. Because empty land is harder for a lender to resell after a default and produces no rental income in the meantime, lenders treat it as riskier collateral than a finished home. They offset that risk with higher rates, larger down payments (often 20–50 %), and shorter terms than a typical mortgage. The monthly payment, however, still amortizes exactly the same way.
The amount financed is the price minus your down payment. That principal is then amortized — spread into equal monthly payments that cover the interest accrued that month first and chip away at the principal second — using the same closed-form formula a mortgage uses. This formula is documented by the Consumer Financial Protection Bureau and standard finance references such as Investopedia, and it is the basis for every fully-amortizing installment loan.
M = P × r(1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)Here P is the amount financed, r is the monthly interest rate (the annual percentage rate divided by 12), and n is the number of monthly payments (the term in years times 12). A 0 % rate is a special case that simply divides the principal evenly across the term. Because interest is charged on the outstanding balance, early payments are mostly interest and later payments are mostly principal — the reason prepaying early saves so much.
Suppose you are buying a $100,000 building lot with road access already in place.
Subtract the down payment
You pay 20 % — $20,000 — up front, so you finance $80,000.Find the monthly rate
An 8.5 % APR becomes 0.7083 % per month (8.5 ÷ 12).Count the payments
A 15-year term is 180 monthly payments.Apply the formula
The amortization formula returns a $787.79 monthly payment.Read the totals
Over 180 payments you pay $141,802 in total — $61,802 of it interest.
The payment math is identical to a mortgage, but the inputs are not. According to the Consumer Financial Protection Bureau's guidance on loan options, the terms a lender offers depend heavily on the collateral, and raw land is among the riskiest. That shows up in three places.
Higher rates
Land loan rates typically run 1–3 percentage points above comparable home-mortgage rates to price in the extra risk.
Larger down payments
Expect 20–50 % down. Improved lots with utilities qualify for the least; raw, undeveloped land demands the most.
Shorter terms
Land loans often run 5–20 years versus a mortgage's 30, and some end in a balloon payment.
The type of land matters most. Raw land has no road access, water, or utilities and carries the steepest terms. Unimproved land has partial access. Improved land — with road, water, sewer, and electricity already in place — qualifies for the best rates and lowest down payments. Enter the rate your lender quotes for your specific situation rather than a generic mortgage rate.
The monthly payment is what you owe each month to fully repay the loan on schedule. The total interest is the price of borrowing — it grows quickly with longer terms and higher rates. Two levers cut it the most: a larger down payment (less principal to finance) and a shorter term (less time for interest to accrue). Try lowering the term from 20 years to 10 and watch the total interest fall sharply, even though the monthly payment rises. If you expect to build soon, also consider that many borrowers refinance a land loan into a construction-to-permanent loan or a standard mortgage once a home is on the parcel, which can lower the rate substantially.
This calculator estimates principal and interest only. It assumes a fixed rate and full amortization with no balloon payment, and it is for planning and comparison only — not financial advice.
An estimate, not a loan offer
Actual terms depend on the lender, the land type (raw, unimproved, or improved), and your credit profile. The result excludes property taxes, land insurance, survey and appraisal fees, title costs, and lender origination fees. Land loans sometimes carry balloon structures or prepayment penalties. Before you commit, review your loan agreement in full and verify the binding figures with a loan officer, mortgage broker, or qualified financial advisor, and rely on the lender's official Loan Estimate rather than any planning tool.