Why We Lend at 65% of Land Value

Every week someone asks me, "The land is worth $100,000. Why only $65,000?" Here is why, in plain numbers, and what to do if 65% is not enough.

Why Do Land Lenders Cap Loans at 65% of Value?

Because the 35% left over is the cushion that keeps the loan whole if the land has to be sold in a hurry.

Land does not pay rent, it can take months to sell, and a forced sale brings less than full price. Foreclosure adds legal costs and time on top. When we lend 65%, the land can sell for a lot less than our estimate and still pay the loan back in full, with room for those costs.

The 65% number is not about you. It is about what the land alone would bring on a bad day. We lend against the bad day, not the good one.

Our full rule on a land purchase loan is the lower of 65% of value or 80% of the price you pay. The second limit means you always have at least 20% of your own money in the deal.

What Makes Vacant Land Riskier to Lend On Than a House?

Land has no income, fewer buyers, softer values, and the same slow foreclosure process as a house.

A rental house pays its own mortgage. A vacant parcel pays nothing, so the borrower covers every payment out of pocket. Fewer people shop for raw land than for homes, so a sale can take a while. And a parcel's value is harder to pin down, because no two pieces of land are quite the same.

1. No income. If a buyer falls through, nothing on the land keeps the payments going.
2. Slow resale. Raw land can sit on the market. If it has to sell fast, the buyer who shows up first usually wants a discount.
3. Foreclosure time and cost. Taking land back means legal fees, taxes, and months of no interest. ATTOM reports that homes foreclosed in Q2 2026 had been in the process an average of 563 days. That is housing data, but land runs through the same courts and trustees. Timelines by state are on our foreclosure timelines page.
4. Less certain value. A house has a dozen nearly identical sales down the street. A 10 acre parcel may have three comps, each with different road frontage, slope, or utilities. Any estimate has more room for error.

In my experience, none of these alone sinks a loan. It is when two of them show up together, like a slow market and a bad comp, that the cushion earns its keep.

How Does the Loan Change at 50%, 65%, and 80% of Value?

On a $100,000 parcel, every step up in loan to value cuts the cushion that protects the loan.

Loan to value, or LTV, is the loan divided by what the land is worth. At 50% the land could sell for half our estimate and still pay the loan off. At 80% it only has to come in 20% low before the loan is short, before counting any legal fees, taxes, or sale costs.

Loan to value	Loan on a $100,000 parcel	Owner's equity (the cushion)	Sale price that just repays the loan
50%	$50,000	$50,000	$50,000
65% (our max)	$65,000	$35,000	$65,000
80%	$80,000	$20,000	$80,000

At 65%, the parcel can sell for $35,000 under our estimate and still repay the loan balance. At 80%, a miss of more than $20,000 means a loss. In my experience, 65% is the ceiling, not the target.

How Do We Value Land Without an Appraisal?

We value every parcel ourselves from sold comparable land, road access, and how fast similar parcels sell.

We do not order an appraisal. We pull recent sales of similar parcels nearby, check that the land has real road access, and look at how long similar land takes to sell in that county. That gives us a value we trust enough to lend 65% against, and it is how we close in 7 days.

Asking prices do not count; anyone can list land for any number. Land with no legal way in is hard to sell at any price. And a parcel in a county where land sells in weeks is a better loan than the same parcel where it sits for a year.

Because our own estimate is the base, the 35% cushion also covers the chance that we are a little off. We would rather be conservative on value than be wrong with your money and ours.

What Does 65% Look Like on a Real Purchase?

On a $100,000 parcel bought for $80,000, the loan is $64,000 and you bring $16,000 down.

We run both limits and take the lower one. 65% of the $100,000 value is $65,000. 80% of the $80,000 price is $64,000. The lower number is $64,000, so that is the loan. Your down payment is the $16,000 difference, which is exactly 20% of the price.

Step	Math	Result
65% of value	$100,000 × 0.65	$65,000
80% of price	$80,000 × 0.80	$64,000
Loan (lower number)		$64,000
Your down payment	$80,000 − $64,000	$16,000 (20%)
Monthly interest at 16%	$64,000 × 0.16 ÷ 12	$853.33
5 month minimum interest	$853.33 × 5	$4,266.67
Exit fee at payoff	$64,000 × 0.02	$1,280

The rate is 16% because the loan is under $100,000; at $100,000 and up it is 14%. Add the $600 closing fee and $25 a month servicing. Interest only, 2 year term.

Now pay full price instead. Buy the same parcel for $100,000 and 80% of price is $80,000, but 65% of value is still $65,000. The loan is $65,000 and you bring $35,000. Paying more for land does not raise the loan. It raises your down payment. More on that in how much down payment you need for land.

A real one: our Florida case study was a 5 acre parcel bought for $72,000, below comparable sales. We lent $57,600, which is 80% of the price, the borrower put $14,400 down, and the parcel was flipped within 6 months.

Why Does Your Down Payment Matter to Us?

A borrower with real money in the deal works much harder to sell the land and pay us back.

When you have $16,000 or $35,000 of your own cash in a parcel, walking away costs you that money. So you price it right, you market it, and you call us early if something goes sideways. In my experience, the borrowers who bring the most cash are the ones who never miss a payment.

That is why the 80% of price cap sits next to the 65% of value cap. Even on a great buy, you have 20% of the price at stake. It is also why most land flip loans we fund close at 20% down: flippers buy at a discount, so the price limit sets the loan.

Can You Borrow More Than 65% of Value?

Yes, with cross collateral: pledge one more property and we can lend up to 100% of the price.

The cushion does not have to come from cash. If you own another property free and clear or with equity, you can pledge it alongside the new parcel. The second property becomes the cushion, so the 65% limit on the new land can go up to 100% of the purchase price, with 0% down.

It is one extra property per loan, not a stack. See 100% financing with cross collateral.

Two other limits work the same way. On a cash out loan, we lend 50% of the lower of the value or what you paid, because there is no new purchase price to confirm the value. And when we buy seller financed land notes, we hold our price to 65% of the land value too. Same land, same risks, same cushion.