— LAND LOANS

Land Loan

Financing

Long-term fixed-rate financing for vacant land acquisition and cash-out refinancing – available for buildable lots, agricultural parcels, recreational land, and investment acreage across all markets where Pacific Home Loans is licensed.

— ABOUT LAND LOANS

What is a
Land Loan?

A land loan provides financing for the acquisition or refinancing of vacant land – property without an existing habitable structure. It is a distinct product category from standard residential mortgage financing, and it is underwritten differently as a result.

Without a completed home serving as collateral, land loans carry a higher degree of lender risk than residential mortgages. The collateral is the land itself – an asset that is less liquid, more difficult to appraise with precision, and more variable in value than an improved residential property. This risk profile is reflected in the loan structure: land loans typically require higher down payments, carry shorter terms than 30-year residential mortgages, and involve more intensive property eligibility review than standard home purchase financing.

Pacific Home Loans offers land loan financing featuring a 20-year fixed-rate structure – a meaningful advantage over the shorter balloon terms and adjustable-rate structures offered by many lenders in this category. Purchase and cash-out refinance options are available for qualified borrowers across all markets where the program is offered.

Land loan availability, loan-to-value limits, and eligible property types are confirmed on a transaction-by-transaction basis depending on location, zoning, and borrower profile.

→ Renovation & Construction Loan Options

— WHY LAND FINANCING IS DIFFERENT

How Land Loans Differ
from Residential Mortgages

Understanding the structural differences between land financing and residential mortgage financing helps borrowers approach the process with realistic expectations and prepares them for the underwriting considerations specific to this product.

Collateral Without Improvements
A standard residential mortgage is secured by an improved property – a home that can be occupied, appraised against comparable sales data, and resold relatively efficiently in most markets. A land loan is secured by raw or minimally improved land, which is less liquid, appraised through a more limited comparable sales methodology, and subject to greater valuation uncertainty. This collateral difference is the fundamental reason land loans are underwritten more conservatively than residential mortgages.

Higher Down Payment Requirements
Because land is a higher-risk collateral class, land loan programs require greater borrower equity than most residential purchase programs. Down payments are typically higher than the minimums available on primary residence purchase loans.

Loan Term and Rate Structure
Many land loan products offered in the market use balloon payment structures – typically 3 to 10 year terms – after which the full remaining balance is due. Pacific Home Loans’ land loan program provides a 20-year fully amortizing fixed-rate structure, which eliminates the balloon maturity risk and provides the payment predictability of a fixed rate over a longer horizon. This structure is particularly relevant for borrowers who intend to hold the land for an extended period before building or selling.

Property Eligibility Review
Zoning, access, utilities, survey status, and environmental conditions all factor into land loan underwriting. The property must be legally accessible, appropriately zoned for the intended use, and free of conditions that would materially impair its value or marketability. Properties with agricultural designations, easement complications, or environmental restrictions require additional review.

No Occupancy Requirement
Unlike residential mortgage programs, land loans do not require the borrower to occupy the property. Land financing is available for investment holdings, future development sites, agricultural operations, and recreational parcels without an owner-occupancy requirement.

— PROGRAM DETAILS

Land Loan
Program Features

20-Year Fixed-Rate Structure
The Pacific Home Loans land loan program features a 20-year fully amortizing fixed-rate mortgage. The interest rate is established at closing and does not change for the life of the loan. Monthly payments are consistent and predictable for the full 20-year term, with no balloon maturity and no rate adjustment periods. This structure provides long-term holding flexibility for borrowers who are not yet ready to build and do not wish to manage balloon payment risk.

Purchase Financing
Land purchase loans are available for qualified borrowers acquiring eligible vacant parcels, subject to property eligibility review, loan-to-value limits, and underwriting guidelines. The acquisition of the land is evaluated independently from any future construction plans – the land loan finances the lot, and a separate construction loan structure is used when the borrower is ready to build.

Cash-Out Refinancing
For borrowers who already own land free and clear or with an existing loan balance, cash-out refinancing may be available based on the current appraised value of the property, applicable loan-to-value guidelines, credit profile, and property classification. Common uses of land cash-out proceeds include infrastructure preparation for future construction, permitting and site development costs, debt consolidation, and general liquidity objectives. Maximum cash-out amounts are subject to underwriting standards and program limits applicable to the specific transaction.

No Prepayment Penalties
Subject to program terms, land loan borrowers may make additional principal payments or pay off the loan in full at any time without prepayment penalty. This flexibility supports borrowers who may refinance the land into a construction loan, sell the property, or accelerate the payoff with proceeds from another source.

Non-Traditional Income Documentation
Land loan underwriting through Pacific Home Loans accommodates self-employed borrowers, investors, and borrowers with non-standard income structures. Alternative documentation approaches may be available for qualified borrowers who do not present standard W-2 income, subject to program guidelines.

— ELIGIBLE LAND TYPES

Eligible
Property Types

Land loan financing is available for a range of vacant land classifications, subject to property eligibility review and program guidelines:

Residential Buildable Lots
Parcels zoned for residential construction with access to utilities and infrastructure. These are the most straightforward category for land loan underwriting, as the intended use is clearly defined and comparable sales data is generally more available.

Large Acreage Parcels
Properties with significant acreage may be eligible subject to appraisal and program review. Larger parcels introduce additional valuation complexity and may be subject to more conservative loan-to-value limits depending on size, location, and zoning.

Agricultural Land
Land with agricultural designations or active agricultural use may be eligible, subject to property classification and program guidelines. Agricultural land appraisals involve specialized methodology and market data, and underwriting review for these properties is more intensive than for standard residential lots.

Recreational Properties
Land acquired for recreational purposes – hunting, camping, equestrian use, or similar – may be eligible depending on access, zoning, and market characteristics. Remote or access-challenged recreational parcels may be subject to additional review.

Investment Land Holdings
Land held as a long-term investment without an immediate development plan may be financed through the land loan program, subject to property eligibility and borrower qualification.

— LAND TO CONSTRUCTION PATH

From Land Acquisition
to Construction

A land loan and a construction loan serve sequential purposes in the development of a custom-built property. Understanding how they connect is important for buyers who intend to build.

Phase 1 – Land Acquisition
A land loan finances the purchase of the lot. The loan is underwritten based on the value of the land as vacant property. No construction plans are required at this stage, and the land loan does not obligate the borrower to any particular timeline for development.

Phase 2 – Construction Financing
When the borrower is ready to build, a Construction-to-Permanent Loan combines the construction financing and the permanent mortgage into a single loan. Existing land equity – the appraised value of the lot less any outstanding land loan balance – can typically be applied toward the required equity position in the construction-to-permanent transaction, which reduces the cash required at construction closing.

The Transition
At the time of construction loan closing, the existing land loan is typically paid off from the new construction loan proceeds. The construction loan then funds the build in draws as work progresses, before converting to a permanent mortgage at completion.

This two-phase approach – land loan followed by construction-to-permanent financing – is a common path for buyers who identify land before they are ready to commit to a full construction project, or who wish to secure the lot while finalizing design and permitting.

→ Construction-to-Permanent Loan

— LAND TO CONSTRUCTION PATH

From Land Acquisition
to Construction

A land loan and a construction loan serve sequential purposes in the development of a custom-built property. Understanding how they connect is important for buyers who intend to build.

Phase 1 – Land Acquisition
A land loan finances the purchase of the lot. The loan is underwritten based on the value of the land as vacant property. No construction plans are required at this stage, and the land loan does not obligate the borrower to any particular timeline for development.

Phase 2 – Construction Financing
When the borrower is ready to build, a Construction-to-Permanent Loan combines the construction financing and the permanent mortgage into a single loan. Existing land equity – the appraised value of the lot less any outstanding land loan balance – can typically be applied toward the required equity position in the construction-to-permanent transaction, which reduces the cash required at construction closing.

The Transition
At the time of construction loan closing, the existing land loan is typically paid off from the new construction loan proceeds. The construction loan then funds the build in draws as work progresses, before converting to a permanent mortgage at completion.

This two-phase approach – land loan followed by construction-to-permanent financing – is a common path for buyers who identify land before they are ready to commit to a full construction project, or who wish to secure the lot while finalizing design and permitting.

→ Construction-to-Permanent Loan

— MARKET CONTEXT

Land Financing Across
Pacific Home Loans Markets

Vacant land acquisition is a meaningful segment of real estate activity across several of the markets in which Pacific Home Loans operates, and the characteristics of land transactions vary significantly by geography.

Hawaii
Hawaii’s limited land inventory, agricultural land designations, leasehold complexities, and zoning restrictions make land financing in the islands a specialized undertaking. The combination of high land values and limited comparable sales data requires experienced appraisal and underwriting review. Land loan availability in specific Hawaii counties and for specific land classifications is confirmed during the consultation.

Colorado Mountain Communities
Lot acquisition ahead of custom construction is a primary driver of land loan activity in Colorado resort markets. Buyers securing lots in Vail, Breckenridge, Aspen, and surrounding communities often acquire land through a land loan while finalizing architectural plans and construction timelines.

Montana Ranch and Rural Markets
Large-acreage parcels in Montana’s Flathead, Gallatin, and Park County markets – including ranch land, recreational properties, and rural estate lots — represent a significant land financing segment. These transactions frequently involve agricultural or recreational land classifications requiring specialized underwriting.

Tennessee Vacation Markets
Lot acquisition in the Smoky Mountains and surrounding vacation destination areas of Tennessee is active among buyers planning short-term rental properties and vacation cabins, where land must be secured before construction financing is arranged.

Texas Hill Country and Rural Markets
Agricultural, ranch, and recreational land acquisition in Gillespie County, Travis County, and surrounding Texas Hill Country markets involves a range of land types and zoning considerations that benefit from experienced land loan underwriting.

For buyers in other licensed markets – California, Nevada, Arizona, Oregon, and Washington – land loan availability and applicable program terms are confirmed on a market-by-market basis during the consultation.

— PORTFOLIO AND SPECIALTY SOLUTIONS

Higher-Value and Complex
Land Transactions

For land acquisitions at higher price points, for parcels with unusual characteristics, or for borrowers whose financial profiles require greater qualification flexibility than standard land loan programs can accommodate, portfolio lending solutions may be available.

Portfolio land financing can accommodate higher loan amounts, more complex ownership structures – including LLC and trust vesting – and non-standard income documentation arrangements. Each scenario is evaluated individually based on the property, the borrower’s financial position, and the intended use of the land.

→ Portfolio Loans & Flexible Financing Solutions

— COMMON QUESTIONS

Land Loan
FAQ

Have a question not answered here? Our team is available to walk through your specific scenario.

A land loan is secured by vacant property without an existing habitable structure, which makes it a higher-risk collateral class than an improved residential property. This difference is reflected in higher down payment requirements, more conservative loan-to-value limits, and more intensive property eligibility review than standard residential mortgages. The 20-year fixed-rate structure offered by Pacific Home Loans addresses a common structural weakness in land lending – the balloon payment risk that arises when short-term land loans mature before the borrower is ready to build or sell.

Land loans generally require a higher down payment than standard residential purchase programs due to the higher-risk nature of vacant land as collateral. Specific requirements depend on the property type, loan amount, and borrower profile and are confirmed during the pre-approval consultation. Higher down payments may be required for larger acreage, agricultural classifications, and remote or access-limited properties.

Yes. Pacific Home Loans’ land loan program accommodates self-employed borrowers and those with non-standard income structures. Alternative documentation approaches may be available for qualified borrowers, subject to program guidelines. The appropriate income documentation methodology is determined during the initial consultation.

Legal access to the parcel, appropriate zoning for the intended use, utility availability or feasibility, survey status, and the absence of material environmental conditions or easement issues are all relevant to land loan eligibility. Properties with complex agricultural designations, access challenges, or unresolved title issues require additional review. Confirming property eligibility early – before entering into a purchase contract – avoids complications during underwriting.

Yes. When you are ready to proceed with construction, existing land equity is typically applied toward the required equity position in a Construction-to-Permanent Loan, which reduces the cash you need to bring to the construction closing. The existing land loan is paid off at the time of construction loan closing. The amount of credit you receive for existing land equity depends on the current appraised value of the land and the applicable loan-to-value structure of the construction program.

Yes, subject to property eligibility review. Agricultural and recreational land classifications are eligible under the Pacific Home Loans land loan program, though these property types involve more specialized appraisal methodology and underwriting review than standard residential buildable lots. Loan-to-value limits and program terms for these property types are confirmed during the consultation.

A land loan finances the acquisition of vacant land only – no construction is included or required. A construction loan finances the building of an improvement on an existing or simultaneously acquired lot. The Construction-to-Permanent Loan combines acquisition and construction into a single transaction. A land loan is the appropriate instrument when the buyer wants to secure a parcel before they are ready to build; a construction-to-permanent loan is appropriate when construction is ready to commence.

Subject to program terms, prepayment penalties do not apply. Borrowers may make additional principal payments or pay off the loan in full at any time – including when transitioning to construction financing – without penalty.

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