Land Loans for Bad Credit

Whether you’re looking to buy land to build your dream residential home or commercial building, you’ll probably need some funding. With so many lenders we connect you with, you’ll be able to get a land loan for bad credit. Get started today and see if you can find a suitable lender!

Get StartedWant to borrow more than $5,000? Click here!
Kiplangat BettFinancial Writer

Jul 27.2022. Filed under: Loans for Bad Credit Hub

What Are Land Loans?

A land loan, also called a lot loan, is the loan that a person gets to finance their land purchase. Typically, the land being bought using a land loan doesn’t have any existing structures, although the buyer may be planning to embark on a building project in the future.

People often confuse lot loans with construction loans, but these two types of loans are different. A construction loan is used to finance people who want to buy land and construct a building right away, while land loans are for people who have no intentions of building on the land or those who want to wait a while before doing any construction.

It’s also worth noting that how you plan to use the land impacts the terms you get for a land loan. For example, if you intend to build a house in one year, you’re likely to get better land loan rates than someone with no building plans.

How Do Land Loans Work?

Applying for a land loan is almost similar to that for a mortgage loan. Before approving your loan, your lender will evaluate your financial information and then run a credit check (mostly soft check).

Once approved, you’ll need to pay a land loan down payment, usually 20% to30% of the price of land, and cover the rest of the loan through monthly payments.

Generally, land loans are riskier for lenders than typical home loans; hence the down payments and interest rates may be higher. However, you can still enjoy lower rates if you have a good credit score and a lower debt-to-income ratio.

What Are the Requirements for Land Loans?

Getting a land loan today isn’t as complicated as you may think. New land loan lenders are entering the market like never before, so you only have to ensure you’re partnering with the right lender.

Here are some basic requirements for a successful lot loan application:

Minimum age of 21 years

To qualify for a land loan, you need to be at least 21 years old.

Income documents

You’ll need to show the lender you can repay the loan. If you have a 9-5 job, have the latest W-2 copies ready, and if you’re self-employed, have some income documentation (bank statements, 1099 forms, annual tax returns) to showcase your financial strength.

A completed application

Since you’re getting a loan for land worth thousands of dollars, the application has to be put in writing. The details of the application will vary from lender to lender. To ensure a smooth application process, give honest and accurate information.

Down payment

As already mentioned, lot loans have a down payment, so be ready to cover it.

Can I Get a Land Loan With Bad Credit?

Yes, you can qualify for a land loan even with bad credit. Sure, the process may be a bit difficult, but it’s not impossible.

One thing to note is that the down payment and interest rates may be high because of bad credit. Most bad credit land loans have an average down payment of 40% to 60%. Therefore, it helps to have a good amount of funds before applying for a loan.

How much would you like?

Get Started

How to Get Land Loans for Bad Credit?

Wondering how to get land loans for bad credit? Don’t worry, here are some of the things you can do to improve your position:

Prove your income

Before a lender approves your loan, you need to convince them you can repay it. Therefore, provide any information that proves you have a steady income. On top of that, have a feasible plan in writing of how you will repay the loan.

Provide more collateral

While the land you’re buying will be used as collateral when taking a land loan, it may not be enough if you have bad credit. Hence, have more collateral ready to soften the deal. Collateral here can be another property you own or the equity in your primary residence. The larger the land loan down payment, the more collateral you’ll need.

Look for lenders with lower credit requirements

Different lenders have varying terms for their loans. Choose a lender whose credit score requirements are lower to increase your chances of getting the loan.

Where Can I Find Land Loan Lenders?

You have various lender options when looking for land financing. Here are some common options you can try.

Local Banks and Credit Unions

While not all credit unions or banks offer land loans, some do. Depending on whether you’re buying raw or improved land, you may even get the chance to choose from different programs. And if the bank or credit union knows the property you’re about to buy, they may offer you better terms.

Government Land Loan Programs

The VA and FHA have programs that can finance your land purchase, especially if you’re looking to build a home right away. The VA land loan serves military members and veterans, while the FHA construction loan is open to all US citizens. One advantage of these loans is their loose buyer eligibility requirements. You may be able to get an FHA loan with a 10% down payment and a credit score of 500.

Online Brokers or Lenders

If you want to apply for a land loan without the hassle of comparing different lenders to get a favorable deal, consider working with online brokers like WeLoans.

We partner with numerous lenders in the market, and we will be glad to connect you with some of the lenders in our network. Best of all, most of our reputable online lenders can offer 100 percent financing land loans, making it super easy for you to buy land.

The Best Place to Take out a Loan

Apply Now

Pros and Cons of Getting a Loan for Land

Like everything else in life, applying for a land loan has both pros and cons.


  • Opportunity to build your dream home. Not everyone wants to buy a ready home. A land loan allows you to build your dream home from scratch.
  • Construct at your own pace. With a land loan, you can buy land and then wait for years before building your home. This is not possible with construction loans.
  • Buying ready-to-build land may be cheaper than buying a new home in some area codes.


    • Land loans are harder to get. Getting a land loan is often more complex than a mortgage loan. Most lenders charge a higher down payment and rates.
    • Not all lenders offer lot loans.
    • Although there are bad credit loans online, most lenders require a good credit score.


1. What Credit Score Do I Need for A Land Loan?

You’ll need a credit score of at least 600 to secure a land loan with most lenders. However, even with a credit score of 600, the APR for the loan will be higher than for someone whose score is in the 700s or 800s.

2. How Much Money Can I Borrow with a Land Loan?

The amount of money you can get for a land loan will depend on various factors like your credit score, debt-income level, and income level. In general, you can borrow up to $50,000.

3. What Is the Down Payment Required to Buy Land?

The down payment for land loans is often larger than that of improved properties. It ranges between 20% and 30% of the total price of land.

4. Is Land a Good Investment?

Absolutely! After buying land, you can improve it as much as you want to boost its value significantly. Besides, the cost of land keeps on rising in many places.

Get a Personal Loan With Our Trusted Lender Today!

If you are looking to make major purchases, but don’t know where to start, don’t worry! We can connect you with a reliable personal loan lender that can give you the ‌funding easily.

Apply now