Buy a $250,000 parcel with 35% down and the loan is $162,500. At 7.5% over 15 years, the payment is $1,495.84 a month. On a five-year term you still owe $126,653 at the end, and that sum must be paid or renewed. Cash needed at the start is $92,500 with closing costs.
How land loans differ
Lenders treat raw land as riskier than a home. It earns nothing. It can be hard to sell. So land loans often ask for a big down payment, carry higher rates and run on short terms. Building later may mean a second loan, with its own rate and rules.
The down payment
Expect to put down 25% to 50%. Many lenders insist on it. Land in a settled area with services may need less than a remote parcel. Set the share yourself. A bigger down payment shrinks the loan. It shrinks the payment too.
Term and amortization
Amortization sets the payment, while the term is how long the lender holds your rate. On a five-year term with a 15-year amortization, the payment is figured as if the loan ran 15 years. When the five years end, a balance remains, and you either pay it off or renew.
The balance at the end of the term
That balance appears in the result, and it is the amount you must either refinance or pay in cash when the term is up. The table lists each year. See how slowly principal falls early on.
Closing costs
Buying land brings legal fees, a survey and, in Ontario, land transfer tax. The calculator uses a share of the price as a planning figure. To check the tax for your area, use the land transfer tax calculator.
Costs beyond the loan
Land takes more than money. Zoning rules, road access, a well or septic system, hydro and environmental checks can add tens of thousands of dollars. Property tax applies every year, and vacant land may have its own rules on top of that, which vary by municipality.
Rural land in Ontario may also need a driveway permit. Some parcels sit inside conservation areas or greenbelt rules that limit building. A lawyer and a surveyor can check title, boundaries and zoning before you commit.
Before you borrow
Ask the lender what it needs: a survey, an appraisal, zoning confirmation and proof of income. Ask about renewal. A conservation authority can limit what you build, too. Get the answers first, in writing if possible, and only then sign anything.
A longer amortization
Stretch the amortization from 15 to 25 years and the payment falls. But the balance at the end of a five-year term is higher. That is the trade: lower monthly cash now, more to refinance later. Compare both.
Comparing offers
Ask each lender for the rate, the fee, the term and the required down payment. A vendor take-back mortgage, where the seller lends part of the price, can be an option for land. Look at the total cost, including the balance you must renew, before the monthly payment.
Where to go next
Weigh a home loan in the mortgage calculator. Plan your cash with the closing costs calculator and the down payment calculator.
Frequently asked questions
How much down payment does a land loan need?
Often 25% to 50%, depending on the land and lender.
Why are land loan rates higher?
Lenders see raw land as riskier than a home.
What is a balloon balance?
The amount still owed when the term ends.
Is land transfer tax due on land?
In Ontario, yes, on most land purchases.
What other costs come with land?
Survey, servicing, zoning checks and property tax.
Can I build with the same loan?
Usually not. Construction needs its own financing.
Sources and updates
Last reviewed: . Full disclaimer. How we build calculators. Editorial policy.
Estimate only. This calculator gives general information for planning. It is not tax, legal or financial advice, and it is not affiliated with the City of Toronto, MPAC or the Canada Revenue Agency. Results depend on the numbers you enter and may differ from official amounts. Check official sources or a qualified professional before you decide.