You own land free and clear. It just sits there while you pay the taxes. Meanwhile you have a deal you want to buy and no cash for it. Can you get a loan against the land you own?
Yes. Banks call it a land equity loan. Investors call it a cash out. Here is how it works.
Can I get a loan against land I own?
Yes. A land equity loan lets you borrow against vacant land you already own.
The land is the collateral. The lender records a mortgage or deed of trust on it and lends you cash. Few banks make these loans on raw land, so most come from private lenders. We make land equity loans for business purposes, $30K to $1M, with no appraisal and a 7 day close.
Own land free and clear?
Borrow against it: 50% of the lower of value or what you paid, $30K to $1M, 7 day close.
See Land Equity LoansGet a Free QuoteHow much can I borrow against my land?
With us, up to 50% of the lower of the land's value or what you paid.
We use the lower of the two numbers because a price paid is a fact and a land value is an opinion. If you paid $150,000 and the land is worth $200,000 today, the base is $150,000 and the loan is up to $75,000. If there is already a loan on the land, we pay it off at closing and you get what is left.
| Example | Amount |
|---|---|
| What you paid | $150,000 |
| Value today | $200,000 |
| Lower of the two | $150,000 |
| Loan (50%) | $75,000 |
What does a land equity loan cost?
14% at $100K and up, 16% under, interest only, same terms as our purchase loans.
There is a $600 doc fee, a 2% exit fee at payoff, $25 a month servicing, and 5 months of minimum interest. No points. On the $75,000 example at 16%, interest is $1,000 a month. Held 8 months, the total is about $10,300. Run your own numbers on the land loan calculator.
What can I use the cash for?
Your land business only.
Buy the next parcel, fund a down payment, pay out a partner, or cover survey and platting costs on another project. The loan is for business purposes, so the land must be owned by an entity and the cash cannot go to a home, a car, or other personal use. See land loans for an LLC.
Is cross collateral better than a land equity loan?
If the cash is for a down payment on more land, usually yes.
With cross collateral, you pledge the land you own as extra collateral on a new purchase, and we can fund up to 100% of the new price. You borrow once instead of twice. Rule of thumb: cash out for cash needs, cross collateral for your next purchase.
What land qualifies for a land equity loan?
Vacant land, 2 acres or more, with legal access and real comparable sales.
The land cannot sit mostly in wetlands or a flood zone, and it has to be in a state we lend in. We do not lend in CA, AZ, NV, NY, NJ, ND, SD, or VT. If a balloon payment is coming due and you only need to pay it off, see land balloon refinance.
Frequently Asked Questions
Can I get a loan against land I own?
Yes. A land equity loan lets you borrow against vacant land you already own. Damen Capital lends $30K to $1M for business purposes with a 7 day close.
How much can I borrow against my land?
Up to 50% of the lower of the land value or what you paid. If you paid $150,000 and it is worth $200,000, the loan is up to $75,000.
What is the difference between a land equity loan and a cash out refinance?
None in practice. Both are loans against land you already own that put cash in your hands.
Can I use a land equity loan for personal expenses?
No. Our land equity loans are for business purposes only, to entities that own the land.