Land Loan Calculator

Created by Arturo Barrantes
Reviewed by Hanna Pamuła, PhD candidate and Steven Wooding
Last updated: Apr 06, 2022

The land loan calculator is a handy tool that, when you are looking for land financing, can help you to calculate your amortization payment. It works similarly to a mortgage calculator. However, a land loan is not considered exactly like a land mortgage since, in some countries, there may not be a collateral requirement.

In this article, we are going to cover what is a land loan and discuss about some differences versus an auto loan and a home loan. Also, we will explore three recommendations about how to get a loan for land.

If, by the way, you are considering other types of loans like student loans for your children, check this fantastic loan repayment calculator for further insight about payments and schedule.

What is a land loan?

Land financing is a particular type of loan where you declare having an interest in a delimited area of land with no building on it.

Banks base loans on future money paybacks and add interest to the loan amount. The borrower can make payments in various periods, such as weekly, biweekly, monthly, yearly, and more. However, what is always constant is that for every payment you make, one part goes to cover the loan part (principal), and the other goes to cover the interest.

If you have doubts about what interest is exactly, check out these two articles about simple interest and compound interest. However, if you are more advanced, the interest rate calculator could be a better suited for you.

What are the parts of a land loan?

The most important parts are the following:

1. Land value

The original land value. It probably has to be defined by a professional in the area since different land types will result in different land prices. For example, land in the middle of nowhere without water and electricity access does not have the same value (and does not have the same risk) as a land that is close to a highway.

2. Down payment required

As you can see, this is also a value required in our land loan calculator because it will probably mean a considerable percentage of the land value. Hover the cursor over the down payment section in the calculator to see its meaning.

3. Annual interest rate

Defined by the financial entity, it will directly affect the amount paid on your periodic payments.

4. Loan length

It represents the amount of time you will have the liability of recurring payment. The benefit of a longer land loan length is lower periodic payments.

5. Frequency of payment

It means how many times you will have to pay the loan. We will consider that the payment frequency will not affect the principal or the interest for this land payment calculator. However, if you are looking to learn more about different payment structures, you can check the partially amortized loan calculator.

Differences between a land loan and other types of loans

If compared with car loans in terms of difficulty to get, land financing is like comparing running a marathon versus running around the park of your neighbors. Not only is it more complicated to get because a land loan demands more money, but it is also is way riskier. Remember that you will be required to have an excellent credit record for getting a land mortgage.

On the other side, if compared with home loans, it is still riskier for the financial entity because of the lack of collateral with similar economic value. Besides, in the case of credit default, how easy would it be to sell a land lot? There is not such a market for land like the one for real estate. Consequently, you should be prepared for being required to put a considerable amount as a down payment. By the way, you can verify the percentage needed using the excellent land payment calculator on the left.

How to get a loan for land? Recommendations

Once you have found your dream plot of land, we recommend defining a straightforward course of action. Here are three recommendations that we suggest you follow to get a better deal:

  • First, you should use our land mortgage calculator to define how much money you would be able to pay. As an extra, our debt to income ratio calculator can give you a solid idea of your recommended debt limits.

    After that, we can consider, for example, a land value of 150,000 USD, a down payment of 15,000 USD, monthly payment frequency, 30 years loan length, and an interest rate of 7.5%. Then, the land mortgage monthly payment would be 943.94 USD.

  • Second, once you know what you can pay, you should start looking for local banks. Local banks would likely be more eager to lend you money since it can bring development to their influence area. On the contrary, if you ask a central bank far away from your desired lot, there will be more rejection probabilities since the land loan will mostly mean risk to them.

  • Third, start preparing your plans for after the acquisition of the land. Lenders and bankers look favorably on loan applications when there is a clear plan of what you will build on the land, especially if you have a starting date. Then it is more likely you will be able to negotiate the interest rate. For such an endeavor, start designing what you will construct. We have a cool set of tools to help you.

How does the land loan calculator work?

Here we are going to discuss the components of this land payment calculator briefly. The formula is composed of the items mentioned above but arranged in the following way:

loan value = land value - down payment

periodic loan payment = loan value / (((1 + i)n - 1) / (i * (1 + i)n))


  • n is the number of payments; and
  • i is the periodic interest rate.

i = annual interest rate / payments frequency

total loan payment = periodic loan payment * n

number of payments = loan term * payments frequency

The variable loan term represents the total length of the loan; meanwhile, number of payments is the total amount of payments you will make through the loan's whole duration. Regarding the two other values the land loan calculator offers, we obtain them from the next two equations:

down payment percentage = down payment / land value

total interest paid = loan payment total - loan value

Finally, the annual interest rate is the important value here, so be sure to understand it well. Do not forget to put it in basis points.

Arturo Barrantes
Land value
Down payment
Down payment percentage
Loan value
Annual interest rate
Loan term
Payment frequency
Periodic loan payment
Total loan payment
Total interest paid
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