How Much Down Payment Do You Need for Land? Real Numbers by Lender and Deal

After "what is your rate," the question I get most is "how much do I have to bring to closing?" The honest answer depends on who lends, what kind of deal it is, and above all what you pay for the land. Here is the down payment by lender, by deal type, in dollars.

How Much Down Payment Do You Need for Land?

Plan on 20% to 50% down at a bank and 20% to 35% with a private land lender, or 0% cash with a second property pledged.

Banks and credit unions set land down payments high because vacant land is hard to resell, with raw land at the top of their range. A private land lender like us looks at the deal instead: buy below value and 20% covers it. Pay full value and you bring more.

Lender or option	Typical down payment	Who it fits
Bank or credit union	20% to 50%, raw land at the high end	Buyers with time, strong credit, and income paperwork
USDA Farm Service Agency Down Payment Program	As little as 5%	Beginning farmers who will run the farm
Private land lender (Damen Capital)	20% on a discounted buy, up to 35% at full value	Investors buying through a company, closing fast
Cross collateral with us	0% cash	Investors who own another property to pledge
Seller financing	Whatever you and the seller agree to	Buyers whose seller will carry the note

Sources: bank range, MIDFLORIDA Credit Union, 9 Things Property Buyers Should Know About Land Loans. USDA, FSA fact sheet for beginning farmers and ranchers. Damen Capital figures are our current program terms.

Why Does the Down Payment Change With the Price You Pay?

Because we lend the lower of 65% of the land value or 80% of the price, so a better price means less cash down.

The two limits cross at about 81% of value. Buy at or below that and the 80% of price limit sets the loan, so you bring 20%. Pay more than that and the 65% of value limit takes over, and every extra dollar of price comes out of your pocket.

Here is the same parcel, valued at $150,000 from comparable sales, bought at three prices:

	Buy at $100,000	Buy at $125,000	Buy at $150,000
65% of value	$97,500	$97,500	$97,500
80% of price	$80,000	$100,000	$120,000
Loan (the lower number)	$80,000	$97,500	$97,500
Cash you bring	$20,000 (20%)	$27,500 (22%)	$52,500 (35%)

In my experience, the fastest way to cut your down payment is not a different lender. It is a better price. Negotiate the land, and the down payment takes care of itself. You can run your own numbers in the land loan calculator.

How Much Down Do You Need for a Land Flip or a Subdivide?

A flip follows the purchase rule, usually 20% down. A subdivide is 20% if the plat records at closing, otherwise 35% at closing with 15% paid back to you later.

A land flip is a straight purchase, so the price table above applies. Flippers buy at a discount, so most of our flip loans land at 20% down.

A subdivide depends on whether the plat is recorded. On a $200,000 purchase:

	Plat records at closing	Plat not recorded yet
Loan at closing	$160,000 (80%)	$130,000 (65%)
Cash you bring at closing	$40,000	$70,000
Holdback released later	None	$30,000 (15%) when the plat records and every lot passes perc
Your cash in the deal after that	$40,000	$40,000

Both paths end at 20% down. The difference is how long you float the extra 15%. If you can get the plat recorded before you buy, do it.

Can You Buy Land With No Money Down?

Yes, if you own another property you can pledge as extra collateral.

With cross collateral, you pledge one property you already own instead of bringing cash. We finance up to 100% of the purchase price at the same rate and terms. It is one extra property per loan, not a stack of them. You can still sell the pledged property any time: the title company pays us a release amount, about what your down payment would have been, and our lien comes off.

Without a second property, true zero down is rare. The other routes are a seller who carries the note, covered in seller carryback financing on land, or a partner who brings the cash.

What Cash Do You Need Besides the Down Payment?

Closing costs, a $600 lender closing fee, and reserves for at least 5 months of interest.

The down payment is not the whole check. Plan for these:

1. Title company costs. Title insurance, recording, and settlement fees. They vary by state and county, so get the title company estimate early.
2. Our closing fee. $600 flat. No points, no appraisal fee.
3. Interest reserves. Payments are interest only: 14% on loans of $100,000 and up, 16% under $100,000, with a 5 month minimum. On an $80,000 loan at 16%, that is about $1,067 a month, so keep about $5,300 set aside.
4. Exit fee. 2% of the loan, paid when the loan pays off, usually from the sale. On $80,000 that is $1,600, and it does not come out of your pocket at closing.

A buyer who spends every dollar on the down payment is one slow sale away from trouble. Keep the reserves.

How Do You Lower the Down Payment on Land?

Buy below value, pledge a second property, or record the plat before you close.

1. Buy at about 81% of value or less. That keeps you at 20% down with us.
2. Use cross collateral. Pledge a property you already own and bring 0% cash.
3. Record the plat first on a subdivide. It turns 35% at closing into 20%.
4. Run the numbers before you offer. Know your cash to close before you sign the contract, not after.

For the rest of what a lender checks, like the company borrower, the purchase contract, and legal access, see land loan requirements.