Reviewed by the Serious Land Capital underwriting team.
Land loan costs differ by lender because banks, credit unions, USDA Farm Service Agency loans, and private lenders each price risk differently. Rates range from about 5.5 percent on government farm loans to 16 percent on hard money loans, plus points and fees vary widely. This article compares lender types so you can see the real cost of each option.
Key Takeaways
- Bank and credit union land loans typically run 6 to 11 percent.
- FSA direct farm ownership loans were priced at 5.50 percent in May 2026.
- Hard money land loans run 8 to 16 percent plus 2 to 5 points.
- Lower rates often come with shorter terms and larger down payments.
- An equity partner charges no interest rate at all, only a profit split.
How Much Do Banks and Credit Unions Charge for Land Loans?
Traditional banks and credit unions price land loans higher than home mortgages because raw land is harder to resell than a house if a borrower defaults. Rates commonly run 6 to 11 percent depending on the loan to value ratio, the borrower’s credit profile, and whether the land already has road access and utilities in place. Buyers comparing quotes across several banks often check their numbers against benchmark data published by Serious Land Capital before signing a loan estimate.
Credit unions sometimes beat bank pricing by half a percentage point or more for members with strong credit, and both typically require 20 to 30 percent down for raw land, well above the 10 to 20 percent common on a home purchase.
- Loan to value ratio the lender is willing to offer
- Whether the parcel has recorded road access and utilities
- Borrower’s credit score and existing debt to income ratio
What Rate Does the USDA Farm Service Agency Offer?
The USDA Farm Service Agency, known as the FSA, sets direct loan interest rates monthly. As of May 2026, the FSA direct farm ownership loan rate stood at 5.50 percent, fixed for the life of the loan with no prepayment penalty.
This program is limited to eligible farmers and ranchers buying agricultural land, not general land investors, and it comes with income limits, experience requirements, and a cap on how much can be borrowed. Buyers who do not qualify for FSA financing still see USDA rates quoted as the benchmark low end of the land loan market.
Why Are Private and Hard Money Land Loan Rates So High?
Hard money and other private land loans average 8 to 16 percent in 2026, plus 2 to 5 origination points paid up front. Private lenders fund based mainly on the land’s value rather than the borrower’s credit, and most cap loans at 50 to 70 percent of appraised value. Buyers who want to compare hard money terms side by side with other lender types can check current listings on Land Funding Partners.
The tradeoff for the higher rate is speed. A private lender can often close in days rather than the weeks a bank or the FSA requires, which matters most for buyers competing against a cash offer or facing a tight contract deadline.
How Do Loan Terms Change the Real Cost of a Land Loan?
The interest rate is only part of the cost. Bank and credit union land loans commonly run 5 to 10 year terms, sometimes with a balloon payment, while Farm Credit and FSA programs can stretch to 15 or 20 years. A shorter term raises the monthly payment even at a lower rate.
Points, origination fees, and appraisal costs add up fast on land loans specifically, since appraising raw or rural land is more specialized and more expensive than appraising a standard home. Buyers should compare the full annual percentage rate, not just the headline interest rate, before choosing a lender.
- Loan term length: 5 to 10 years for banks, up to 20 for FSA or Farm Credit
- Origination points and fees, especially on private and hard money loans
- Appraisal cost, which runs higher for raw or rural land than for a home
What Is the Risk of a Balloon Payment on a Land Loan?
Many bank and credit union land loans amortize over 20 or 25 years on paper but come due in full after 5 or 7 years, which is the balloon structure common on land and commercial style lending. Borrowers need a plan to refinance or sell before the balloon date, since missing it can trigger default even on a loan with a perfect payment history.
Should You Get Quotes From More Than One Lender Type?
Yes. Rate spreads between lender types are wide enough that shopping only one bank can cost thousands of dollars over the life of a land loan. A buyer who gathers a bank quote, a credit union quote, and an FSA or Farm Credit estimate side by side usually finds a real difference in both rate and required down payment.
Getting more than one quote also reveals fees that do not show up in the advertised rate, such as appraisal cost, origination points, and prepayment penalties. Two lenders quoting the same headline rate can still produce very different total costs once those extra charges are added in.
Does Your Credit Score Change Which Lender Type Makes Sense?
Yes, significantly. Borrowers with credit scores above 740 generally qualify for the lowest rates a bank or credit union offers and have the most lender options overall. Scores below 680 often mean higher rates, larger down payment requirements, or a lender declining the loan altogether, which pushes many buyers toward private or hard money financing instead.
A lower credit score does not rule out land ownership. It usually just changes which lender type is realistic, and it makes an equity partner or seller financing worth comparing before accepting a high rate private loan out of necessity.
Is There a Land Funding Option With No Interest Rate at All?
Yes. Serious Land Capital structures land funding as an equity partnership rather than a loan. There is no interest rate, no monthly payment, and no credit score requirement in the way a bank applies one, because the partner purchases the property, takes title, and covers closing costs directly.
“People ask us what our rate is, and the honest answer is we do not have one. We are not lending money, we are buying the land and sharing the outcome,” says Chris Duff, Managing Partner, Serious Land Capital.
Instead of interest, the partner takes a share of the profit when the land sells, typically 50/50 to 70/30 depending on the deal, which means the cost of capital moves with the outcome rather than accruing every month regardless of how the deal performs.
Buyers who want to see how an equity structure compares dollar for dollar against a bank, FSA, or private loan on a specific deal size can run the numbers on Land Funding Partners before committing to either path.
People Also Ask
What credit score do you need for the best land loan rate?
Most banks and credit unions reserve their lowest land loan rates for borrowers with credit scores of 740 or higher. Scores between 680 and 740 typically still qualify but at a higher rate, and scores below 680 often push buyers toward private lenders or an equity partner.
Are land loan rates always higher than home mortgage rates?
Almost always, because lenders view raw land as harder to resell than a home if a loan defaults. The gap commonly runs 1 to 3 percentage points above a comparable home mortgage rate, depending on the lender and the land type.
Does the type of land change my interest rate?
Yes. Land with road access, utilities, and a recent perc test typically qualifies for a better rate than raw, unimproved land in a remote area. Agricultural land financed through the FSA or Farm Credit often carries the lowest rates of all.
How often does the FSA update its lending rates?
The Farm Service Agency publishes new direct loan interest rates monthly, so the rate quoted in one month can change by the next. Always confirm the current rate directly on the agency’s site before using it to plan a purchase.
What is a typical down payment for a land loan?
Banks and credit unions commonly require 20 to 30 percent down for raw or rural land, higher than the 10 to 20 percent typical on a home purchase. FSA and Farm Credit programs sometimes allow less down for qualifying borrowers.
Can I negotiate points with a private land lender?
Sometimes, especially on larger deals or when you can show competing offers from other lenders. Points are more negotiable than the base interest rate itself, since they represent upfront lender profit rather than the ongoing cost of the loan.
Is an equity partnership cheaper than a loan over time?
It depends on how the land performs. A loan has a fixed, predictable cost regardless of outcome, while an equity partnership’s cost moves with the profit split when the land sells, which can end up cheaper or more expensive than interest depending on the gain.
