The maths, with your numbers
What paying extra would do
Every dollar above the payment comes straight off the balance, so the interest stops being charged on it. These are worked out from the loan above.
How the balance falls
The same loan over different terms
| Term | Payment | Total interest | Total repaid |
|---|
A longer term lowers the payment and raises the interest. Your loan is highlighted.
Amortization schedule
Where each payment goes, from the first to the last.
Land is the hardest thing to borrow against. There is no house to repossess and resell, so lenders want a bigger deposit, charge more, and often want the loan gone sooner than a mortgage.
Why the deposit is so large
Bank regulators publish supervisory limits on how much of a property's value should be lent, and land sits at the bottom of the table: 65% for raw land, 75% for land development, 80% for commercial construction, 85% for one-to-four family residential construction and for improved property. Those limits are why 35% down on raw land is a normal ask rather than an insult.
Shorter terms, and often a balloon
Land loans are commonly written on a short term with the payment worked out over a much longer schedule, which leaves a lump sum due at the end. That is a balloon payment, and it means the plan has to include selling, building or refinancing before it falls due. Work out that number before you sign, not after.
Construction is a different animal
A construction loan advances money in stages as the build progresses, usually with interest-only payments on the drawn amount, then converts to a normal mortgage or is repaid by one. The calculator above handles the permanent loan; for the build period, ask the lender for the draw schedule and the interest-only cost at each stage.
Farm land has its own programmes
If the land is for farming, the USDA Farm Service Agency lends directly and guarantees bank loans, with farm ownership terms running up to 40 years and a down payment programme that needs as little as 5% down. The terms are far better than commercial land finance, and worth checking before going to a bank.
Quick answers
How much deposit do I need for a land loan?
Often around 35% on raw land. Bank regulators set supervisory loan-to-value limits of 65% for raw land, 75% for land development and 85% for improved property.
Why are land loan rates higher?
There is no building to repossess and resell, so the lender's security is weaker. Rates and deposits reflect that.
Do land loans have balloon payments?
Frequently. The payment is worked out over a long schedule while the loan itself ends much sooner, leaving a lump sum due.
Is a USDA farm loan cheaper?
For farmland, usually. The Farm Service Agency lends directly and guarantees bank loans, with farm ownership terms up to 40 years and a down payment programme needing as little as 5%.
Sources
- Interagency Guidelines for Real Estate Lending Policies, 12 CFR Part 365 (supervisory loan-to-value limits)
- USDA Farm Service Agency, farm loan information chart (October 2025)
- CFPB, balloon payments