Residential
Land
Loans

About land loans

Owning land is vital, whether you plan to use it for residential, commercial, or agricultural purposes. At Canopy Credit Union, we make the process as simple as possible. 

A land loan is a type of credit designed to help you purchase a tract of land, whether it’s raw land, bare land, or improved land. Sometimes called a plot loan or lot loan, it’s perfect for people who want to secure the right property now but aren’t quite ready to build a home, start a business, or take out a construction loan just yet.

A rural road just off of the Old Palouse Highway with the Canola Fields in bloom.

How do land loans work? 

Because land loans don’t have a house or building to act as collateral, lenders must carefully assess the value of the real estate you’re buying. This added risk means land loan rates are often higher than traditional mortgage rates, and they may require a larger down payment and more detailed qualifications.

Step 1: Choose Your Land and Your Purpose for It

Before you apply for a land loan, take time to create a detailed plan for your purchase. Do you plan for the property to be for residential, commercial, or agricultural use? What type of structure (if any) would you like to build later? Determine whether you’re seeking raw land, bare land, or an improved lot. You can explore listings on your own or work with a real estate agent who specializes in land sales to help you find the perfect plot.

Step 2: Get Preapproved for a Land Loan

Once you’ve chosen the right type of land, it’s time to talk about financing. Getting preapproved for a land loan helps you understand your land loan rates, down payment requirements, and estimated monthly payment. At Canopy Credit Union, we make preapproval straightforward. Simply provide a clear plan for how you intend to use the land and meet the basic loan qualifications. This step gives you confidence as you search and negotiate for your property.

Step 3: Buy the Land You Need

When you’ve found the land that checks all your boxes, you’re ready to make it yours! Apply for your land loan with Canopy CU, lock in your rate, and move forward with closing. At this stage, you will need to submit the financial requirements, as well as detailed information about the land you intend to purchase, including a plan of use, zoning, official boundaries, and access to utilities.

land loan requirements

Before you apply for a land loan, it’s helpful to know what most lenders look for. Meeting these qualifications can make the process smoother and increase your chances of approval:

types of land loans

Not all land is the same and neither are the loans used to finance it. Land loans are categorized based on how much development the property already has. Knowing the type of land you’re buying helps lenders decide how much they’re willing to finance and what kind of down payment and loan terms will apply.

At Canopy Credit Union, we make it easy to understand your options. Whether you’re buying raw land, bare land, or an improved lot, our team can walk you through available terms and find a solution that fits your goals.

calculate your land loan payment 

Wondering what your monthly payment might look like? Our land loan calculator makes it simple. Just enter your land purchase price, down payment amount, and loan term to see an estimate of your monthly payment.

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apply for a land loan online

We’re proud to support our Spokane community by helping neighbors secure the land they need to grow. With our simple online application, you can get started from anywhere, eliminating the need to wait or visit a branch.
Apply today and let our friendly loan officers guide you every step of the way. Together, we’ll make it possible for you to own the land you’ve been dreaming of.

land loan FAQs 

You asked, we answered! Here are the frequently asked questions of our Spokane members.

If you have plans to build on land, you can be eligible for a tax exemption with your land loan. However, if you don’t have a plan to build on it yet, you may not qualify for one. Consult with a tax professional to know more.

Land loans typically have shorter terms than traditional mortgages, which generally are about 15 years. The short loan terms help minimize the high risks associated with land loans.

Land loans are considered high risk because there is no physical structure on the property to serve as collateral. For instance, if a borrower already lives on the land where a home is located, they are more likely to keep up with mortgage payments to remain in their home. However, from the perspective of many lending institutions, borrowers could more easily default on an empty plot because there is no investment to secure or collateral that the lenders can use to recover their loss.

Once you’re ready to build, your land loan can be integrated with the construction loan to finance the land purchase and construction costs. The construction loan can then be transformed into a standard mortgage once the construction is complete.

Yes, you can. See our construction-to-permanent loan information to learn more.

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land loan resources

Learn more about land loans with our extensive resources.

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