David is a Chartered Financial Analyst with over 15 years of experience in real estate financing, specializing in land acquisition, development, and construction loans.
This 4-in-1 Land Loan calculator helps you model your financing payments for purchasing raw land. Enter any three variables—Loan Amount, Annual Rate, Term, or Monthly Payment—and we will solve for the fourth.
Land Loan Calculator
Land Loan Payment Formulas
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
Solve for Loan Amount (P):
P = M [ (1 + i)^n – 1 ] / [ i(1 + i)^n ]
Solve for Loan Term (T):
T = ln(M / (M – Pi)) / (n * ln(1 + i))
Solve for Rate (R):
Solved iteratively (no direct formula)
Formula Variables
- (P) Loan Amount: The total principal amount borrowed for the land purchase.
- (R) Annual Rate: The annual interest rate. Note: Land loans often have higher interest rates than traditional mortgages.
- (T) Loan Term: The total number of years to repay the loan. Land loan terms are often shorter, such as 10, 15, or 20 years.
- (M) Monthly Payment: The fixed monthly payment (Principal & Interest) required to pay off the loan.
- (i) Monthly Rate: The annual rate divided by 12.
- (n) Total Payments: The total number of payments (Term in years * 12).
Related Calculators
- Construction Loan Calculator
- Conventional Loan Calculator
- Mortgage Payment Calculator
- Jumbo Loan Calculator
What is a Land Loan Calculator?
A Land Loan Calculator is a financial tool used to estimate the monthly payments on a loan taken out to purchase a plot of raw or unimproved land. Unlike a traditional mortgage, which is for a home, a land loan is considered higher risk by lenders because there is no structure (house) on the property to act as readily-available collateral.
Because of this increased risk, land loans typically require a larger down payment (often 20% to 50%) and may come with higher interest rates and shorter repayment terms than a standard 30-year mortgage. This calculator helps you understand how these unique factors (amount, rate, term) will affect your monthly payment.
This 4-in-1 tool allows you to solve for any of the four main variables. You can calculate your payment, see how much land you can afford, or determine how a change in the interest rate will impact your budget.
How to Calculate Land Loan Payments (Example)
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Identify Your Variables
You want to purchase a plot of land with a Loan Amount (P) of $100,000. Your lender offers you an Annual Rate (R) of 8.5% and a Loan Term (T) of 15 years. You want to find your Monthly Payment (M).
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Convert Annual Rate to Monthly (i)
First, convert the annual rate to a monthly decimal: i = (8.5% / 100) / 12 = 0.085 / 12 = 0.007083
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Calculate Total Number of Payments (n)
Next, find the total number of monthly payments: n = 15 Years * 12 Months/Year = 180 payments
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Apply the Amortization Formula
Use the standard loan payment formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
M = 100,000 [ 0.007083 * (1 + 0.007083)^180 ] / [ (1 + 0.007083)^180 – 1 ]
M = 100,000 [ 0.007083 * (3.5645) ] / [ 3.5645 – 1 ]
M = 100,000 [ 0.025244 ] / [ 2.5645 ]
M = 100,000 * 0.009843
M = $984.30 -
Final Result
Your fixed monthly principal and interest payment for the 15-year land loan will be $984.30.
Frequently Asked Questions (FAQ)
Yes, almost always. Lenders view raw land as riskier collateral than a home. Because there’s no structure, it can be harder to sell, and borrowers are more likely to default on a land loan than their primary home. This higher risk translates to higher interest rates.
What is a typical down payment for a land loan?It varies by lender and land type (raw land vs. a lot in a subdivision), but you should expect a much larger down payment than a traditional mortgage. It typically ranges from 20% to 50% of the purchase price.
What’s the difference between a land loan and a construction loan?A land loan is used *only* to buy the land. A construction loan is used to finance the *building* of a house on that land. Often, buyers will get a land loan first, and then apply for a construction loan, or they will get a combined “construction-to-permanent” loan that covers both.
Can I find out how much land I can afford?Yes. Enter the Monthly Payment (M) you can afford, a quoted Annual Rate (R), and your desired Loan Term (T). The calculator will solve for the Loan Amount (P) you can support, which (combined with your down payment) gives you your total budget.