Land Loans: Using a Personal Loan to Buy Land

Building a house usually starts with finding land to make it, but financing the ground can be more complex than getting a traditional mortgage. You can take advantage of personal loans for land from a bank or credit union. Let's look at how to use a personal loan to buy land and when you might choose that route.

Can You Use a Personal Loan to Buy Land?

Personal loans can have fewer upfront costs for buying land since borrowers may not have to pay for appraisals, surveys, title searches, and additional closing costs.  Whether you can use a personal loan for land may depend on how much you'll need to borrow. Personal loan amounts range from $1,000-50,000, depending on your income, existing debt, credit score, and the lender. 

Where can I get a personal loan to buy land?

This is not an exhaustive list but should give you a starting point when looking for a personal loan to buy land in Ohio.

Credit union loans

A credit union loan is an option. The banker probably knows the area. They are more likely to work with you if your plan includes developing your land or building a house. Some credit unions have an option of land loan online application.

Home secured loan

Consider using your existing capital to make a down payment on a land loan. Lenders like to see that you have additional collateral, suggesting that you are less likely to default on your loan.

Owner funding

This is a seller-buyer option whereby you agree to pay the person selling the land in installments rather than through a secondary lender. Since you are drawing up a promissory note containing various elements of a purchase - interest rate, repayment, what happens in case of default - consider legal advice when obtaining this type of loan. Bank loans are typically insured for up to $250,000, while private-to-private purchases are not.

Farm loans

A loan through the USDA's Agricultural Services Agency may be an option if you consider starting a farm. The FSA is useful for people who may not have the best credit history but have experience in agriculture.

How does a personal loan to buy land work?

Getting a personal loan to buy land is like getting a loan for any other purpose. People with better credit scores will qualify for better rates. The rate you will pay on a personal loan may depend on the purpose for which you use it, but some lenders do not require you to disclose this information. Lenders are usually more concerned about whether you can repay the loan.

When you buy a personal loan to buy land, be sure to pay attention to several factors:

  • The interest rate (APR) is the money you pay the lender as the cost of borrowing money. Most personal loan lenders advertise their rates as APR. This includes the interest rate and any fees you pay and is the cost of borrowing money.

  • Fees. Personal loans may have an origination fee, usually charged as a percentage of the loan amount and deducted from the money you receive. You can find a personal loan without an origination fee with a good credit score.

  • The terms of the loan are the period during which you must repay the loan. The longer the time, the lower your monthly payment will usually be, but the more interest you will pay over the life of the loan.

What are the pros and cons of a personal loan to buy land?

A personal loan isn't the only way to purchase a piece of land, so it's essential to weigh the pros and cons of all your options before choosing a financing method.


  • Fast Closing Time. Personal loans are disbursed quickly, sometimes on the same day, but usually within a few days of completing your application. Closing traditional land or construction loans from a bank can take several weeks.

  • Fewer commissions. You can find personal loans without fees with an excellent credit history. Other land purchase options will have upfront payment and closing cost requirements that can add up quickly.

  • Flexibility. With few restrictions on how you use your loan, you can easily redirect the money to other land-related expenses.

  • Unsecured. Personal loans usually do not require collateral, so the land you buy is not considered collateral for the loan.


  • Potentially higher interest rates. Personal loans can carry higher interest rates than mortgages and other secured ways to buy real estate. The better your credit score, the better the interest rate you are likely to be offered. 

  • Shorter repayment periods. Personal loans often have a repayment period of three to seven years, although you can find loan terms of 10 to 12 years with some lenders. The shorter the loan term, the higher your monthly payment will be. The mortgage term can be 30 years, so your monthly price will likely be much lower.

  • Smaller loan amounts. Personal loan lenders will limit the maximum loan amount you can get. It can be as little as $35,000 or $50,000, although some personal loan lenders allow you to borrow up to $100,000, depending on your credit score. Depending on the land you buy, a personal loan may not be enough.

  • It may not be available to all lenders. Some personal loan lenders may prohibit borrowers from using their loans to purchase land. Consult a lender before taking out a personal loan to buy land.

Understand if you can buy land with a personal loan

Buying land on which you plan to build a property from scratch can give you an edge in getting a place to call home. Because the personal loan is not a mortgage and you will be buying the land, no collateral is required. However, it is essential to consider the interest rate that comes with it.

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