Investors searching vacant land loan, raw land financing, and land acquisition loan for investors are at the first step of a development funnel — acquiring dirt before vertical construction, lot split, or pad development begins. Land is the highest-risk collateral in real estate lending: no income, no structure, no depreciation. Lenders who fund land do so on sponsor strength, entitlement path, and exit clarity.
This page covers land acquisition and bridge-to-build financing — explicitly positioned as the entry point to Jaken Finance Group’s ground-up construction loans and build-to-rent financing programs. If the plan is to plat multiple lots, streets, and utilities, continue with subdivision development financing and the subdivision development guide.
Land financing vs. improved-property financing
| Factor | Improved property (SFR, multifamily) | Vacant / raw land |
|---|---|---|
| Collateral | Structure + land | Land only |
| Income | Rent or ARV | None until developed |
| Leverage | Up to 100% of cost, capped at 75% ARV | 50%–65% LTV (land) |
| Underwriting | ARV, rent, NOI | Exit strategy, entitlement, sponsor liquidity |
| Term | 6–24 months | 6–18 months bridge |
| Rate | 8.99%–13.5% | 8.99%–13.5% IO |
When land loans make sense
| Scenario | Land loan role |
|---|---|
| Ground-up SFR or duplex | Acquire lot → roll into construction loan |
| Build-to-rent community | Assemble parcels → BTR financing |
| Pad development (MHC, storage) | Land acquisition → horizontal improvement → vertical phase |
| Lot split / sell | Bridge carry until lots are entitled and sold |
| Infill in established neighborhood | Tear-down lot — demo + build in combined facility |
What lenders review on land files
- Survey and legal description — acreage, boundaries, easements
- Zoning — residential, commercial, agricultural; permitted uses
- Entitlement status — platted? subdivision approved? variances needed?
- Environmental — Phase I ESA; wetlands, flood zone, prior industrial use
- Utilities — public water/sewer at lot line vs. well/septic required
- Exit strategy — build plan with budget, or lot-sale comps
- Sponsor liquidity — carry, interest reserve, entitlement costs
- Purchase price vs. comp — land comps by the acre or by the lot
The bridge-to-build funnel
Land acquisition is step one in a three-phase capital stack:
Phase 1: Land acquisition (this page)
↓
Phase 2: Ground-up construction draws
↓ → /ground-up-construction-loans-no-experience/
Phase 3: Permanent debt or sell-out
↓ → DSCR refi or retail sale
↓ → /build-to-rent-financing-programs-for-developers-2026/Phase 1 — Land bridge: Acquire the lot at 50%–65% LTV. Interest-only carry for 6–18 months while entitlements finalize and construction plans are stamped.
Phase 2 — Construction: Roll into ground-up construction financing with vertical draw schedule — foundation, framing, MEP, CO. Same lender relationship, no re-underwriting from scratch.
Phase 3 — Exit: Sell to retail buyer, execute build-to-rent lease-up and DSCR refi, or sell finished lots after a recorded plat — see subdivision development financing.
For build-to-rent developers assembling multiple lots, see build-to-rent financing programs for developers.
Typical land loan terms
| Parameter | Range |
|---|---|
| Rate | 8.99%–13.5% IO |
| LTV | 50%–65% of as-is land value |
| Term | 6–18 months |
| Points | 1–3 at closing |
| Close speed | 7–10 business days on a land bridge |
| Recourse | Personal guaranty typical |
Higher leverage (up to 75% LTV) may be available when land is combined with a construction budget in a single ground-up facility — the structure is acquisition + vertical in one loan, not land-only.
Worked example: infill lot → ground-up SFR
| Step | Detail |
|---|---|
| Land purchase | 0.25-acre infill lot, zoned SF-3, $85,000 |
| Land bridge | 60% LTV = $51,000 loan; $34,000 sponsor equity |
| Entitlement | Demo permit for existing structure; 3 months |
| Construction | $285,000 vertical budget via ground-up loan |
| As-completed value | $395,000 (per comps) |
| Exit | Sell at $395,000 or DSCR refi at 75% of $395,000 = $296,250 |
Sponsor equity at land: $34,000. Total project equity: land down payment + construction down payment + carry. One lender relationship from dirt to door.
Land due diligence checklist
- Title commitment — easements, liens, encroachments
- Survey — boundaries match legal description
- Zoning letter — permitted use confirmed with municipality
- Utility will-serve — water, sewer, electric, gas availability
- Flood zone — FEMA map panel; elevation certificate if in SFHA
- Environmental — Phase I; Phase II if recommended
- Comp analysis — land comps and finished-product comps
- Budget — soft costs (entitlement, engineering) + hard costs (vertical)
Risks
- Entitlement delay — zoning variance or subdivision denial kills the timeline
- Environmental remediation — prior use contamination is expensive
- No income during carry — sponsor must fund interest from liquidity
- Market softening — finished-product comps may decline during 12–18 month build
- Utility extension — off-grid lots require capital-intensive infrastructure
Next steps in the funnel
- Ready to build? → Ground-up construction loans no experience
- Building a rental community? → Build-to-rent financing programs
- Need commercial land for storage or MHC? → Self-storage financing · MHC financing
Pre-Qualify Today · Ground-up construction · Build-to-rent · (833) 264-7776
Raw land LTV — improved vs. unimproved
| Land type | Typical LTV | Rate band |
|---|---|---|
| Infill with utilities at lot line | 50%–65% | 8.99%–13.5% IO |
| Agricultural / no utilities | 35%–50% | 8.99%–13.5% IO |
| Land + approved plans | 55%–70% | Bridge to vertical |
Exit must be defined — vertical construction, lot split sale, or refi after build. Ground-up construction · new construction hub · USDA not for investors.
Phase I inquiries before the survey is “clean”
Dirt can hide a prior use that a drive-by will not show. EPA’s All Appropriate Inquiries page describes the process for evaluating environmental conditions and potential contamination liability. The page states that ASTM E1527-21, the Phase I practice for environmental site assessments, and ASTM E2247-23, the forestland and rural practice, are consistent with the All Appropriate Inquiries rule at 40 CFR Part 312.
A lender file still asks a practical question. Was the parcel a dry cleaner, a fuel stop, a farm dump, or a fill site? If the environmental professional recommends sampling, the bridge clock stops until the report is back. Do not treat a Phase I as optional on a parcel with any industrial neighbor.
Order the flood panel for the parcel. Price any elevation work before you promise a vertical start date. Do not guess the zone from a neighboring listing.
Materials inflation on the vertical budget
The land loan does not buy lumber. The construction budget does. The construction materials producer price index was 375.908 in August 2026 and 341.458 in August 2025. That is 10.1% higher than a year earlier. The series is not seasonally adjusted.
Illustration. A materials package priced at $70,000 in August 2025, if it had moved with that index, would be about $77,070 in August 2026. The math is $70,000 × 1.101. Bids do not track an index line for line. Update the budget from current supplier quotes, then size the interest reserve off the new number.
Illustration: twelve months of land carry
Illustration only. Not a closed loan.
| Line | Amount |
|---|---|
| Contract price | $120,000 |
| Land-only loan at 60% | $72,000 |
| Sponsor cash at closing | $48,000 |
| Interest-only rate | 12% |
| Carry term | 12 months |
| Interest | $8,640 |
Interest is $72,000 × 0.12. There is no rent to offset it. The sponsor wires the $8,640 from liquidity, or the loan includes a reserve that still has to be earned back at exit.
A land bridge on a complete file can close in 7–10 business days at 8.99%–13.5%. Twelve percent in the table sits inside that band. Vertical construction is a separate quote. New-construction files at Jaken Finance Group are also priced at 8.99%–13.5%, with leverage up to 100% of cost on qualified files, and a close target of 10–14 business days.
The 60% land figure is not the flip rule. A fix-and-flip of an existing house can fund up to 100% of cost, still capped at 75% of ARV, for 6–12 months. Raw dirt does not have an ARV until the plans and the finished-product comps exist. That is why land-only leverage in the table above stays at 50%–65%.
What has to be true before the roll into vertical
Use this gate before you ask to convert the land note into draws.
- Zoning letter matches the unit count in the pro forma.
- Utilities are at the lot line, or the off-site cost is in the budget with a will-serve letter.
- The Phase I is in the file, and any Phase II scope is priced.
- The survey ties the legal description to the stakes.
- Finished-house or finished-lot comps are inside a radius the appraiser will actually use.
- The interest reserve covers the entitlement months plus the build, not just the build.
A DSCR exit after the certificate of occupancy uses rent, not the construction coupon. Purchase leverage on that permanent loan can go to 85% in select markets. Cash-out is capped at 80%. Rate-and-term refinance can go to 85%. The rate band is 5.75%–10.5%, and the close is about 14 business days. Do not underwrite the takeout at the bridge rate.
If the exit is a sale of finished lots, the plat has to be recorded before those contracts are real. Read subdivision development financing when the map shows streets, not one infill lot. One house on one lot stays on the ground-up construction path.
Soft costs that sit outside the dirt price
The contract price is not the cash you need in month one. Entitlement and design often hit before the first draw on vertical work.
| Soft cost | Why it is in the reserve |
|---|---|
| ALTA or boundary survey | The legal description has to match the stakes |
| Zoning letter | The unit count has to be a permitted use |
| Civil engineering | Septic, stormwater, or a shared drive |
| Architecture | Plans the building department will stamp |
| Impact or tap fees | Due before the meter is set |
| Interest reserve | No rent until the certificate of occupancy |
Illustration. A $120,000 lot with $48,000 down still needs the $8,640 of interest from the carry example. Add a $15,000 survey and engineering package. Cash before vertical debt is $71,640 ($48,000 + $8,640 + $15,000). If the engineering quote comes in at $22,000, the cash figure becomes $78,640. Update the reserve. Do not leave the old number in the pro forma.
A ground-up quote can include some of those soft costs when they are in the budget and the plans are far enough along. Until then, the land bridge only carries the dirt. Ask Jaken Finance Group which costs the facility will include before you sign the land contract. Phone (833) 264-7776. Open the loan menu if the choice is still between a land note and a combined construction loan.
Rates, terms and conditions offered only to qualified borrowers and are subject to change at any time without notice. Jaken Finance Group only finances non-owner occupied investment properties and select commercial development files.