Land Financing Calculator – Interest-Only Acquisition
Plan land acquisition financing with interest-only payments and cash-to-close insights.
Outputs are estimates for planning purposes and not lending or investment advice. Confirm terms with your lender before closing on land.
Table of Contents
How to Use
- Enter the land purchase price and the down payment percentage a lender requires.
- Add the interest rate and number of months you expect to carry the interest-only loan.
- Include optional closing costs, monthly holding costs, or improvement budgets to capture total cash needs.
- Select Calculate to see monthly interest, balloon payoff, cash to close, and holding cost totals.
How land financing works
Land financing is typically a short-term, interest-only loan secured by raw or entitled land. Because there is no structure to collateralize, lenders often require larger down payments and faster exits than traditional mortgages.
Investors commonly use land loans to tie up parcels while pursuing entitlements, engineering, or sale contracts. Planning for a realistic holding period helps you avoid expensive extensions.
Costs to track
- Cash to close: down payment, closing costs, and site work paid up front.
- Monthly interest: interest-only payment driven by loan amount and rate.
- Holding costs: taxes, HOA dues, insurance, and security to keep the parcel in good standing.
- Exit balloon: the principal balance that must be paid when you refinance or sell.
Ways to de-risk the hold period
- Align your holding period with entitlement timelines plus a contingency buffer.
- Track improvement budgets separately so you can phase work if the market slows.
- Keep monthly carrying costs in reserves to avoid distress sales.
- Secure multiple exit strategies—sale, refinance, joint venture—to ensure you can retire the balloon payment.
Frequently Asked Questions
- What is considered land financing?
- Land financing usually refers to short-term, interest-only loans used to control vacant land. Banks, private lenders, and specialty funds may provide these loans while you pursue entitlements, a buyer, or long-term financing.
- How much cash do I need for a land loan?
- Most lenders require a 25‑40% down payment plus closing costs. You also need reserves for taxes, insurance, and any site work. Use this calculator to estimate the total cash outlay for your specific parcel.
- How long can I keep an interest-only land loan?
- Many lenders offer 12‑36 month terms with extension fees. Model a realistic holding period plus exit cushion so you can repay or refinance the balloon payment before maturity.
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