Land Loans vs. Home Loans: What’s the Difference and Why It Matters
Buying land is a big step—and if you’ve ever financed a home before, you might assume the process is similar. But land loans and home loans are two very different animals, and understanding those differences can save you time, money, and a lot of confusion.
Let’s start with the basics. A home loan is designed for a property that already has a house on it. It’s a well-worn path, with predictable terms and plenty of lenders offering options. A land loan, on the other hand, is for raw or undeveloped land—and that changes the game.
Joseph Reed, Branch Manager in Demopolis, AL puts it best:
“The difference between land and home loans can sometimes be like night and day. Having an experienced lender guide the borrower through the land financing process is pivotal to a smooth transaction. Not only can our team find the right lending product for our borrowers, we will also assist in navigating the entire process to ensure the property being purchased has clear and merchantable title, legal access and is described correctly. After all, helping borrowers make smart and informed decisions is what we do best.”
Land loans often require a larger down payment, sometimes 15 to 30 percent or more. The terms can be shorter, and the interest rates might be a bit higher, depending on the property and your plans for it. That’s because land is considered a riskier investment—there’s no house to serve as collateral, and the value can be harder to pin down.
Another key difference? Not every lender offers land loans. You’ll want to work with someone who understands rural property and can guide you through the process. That’s where we come in.
At First South Farm Credit, we specialize in land financing. We’ll help you use tools like a land loan calculator to estimate your payments and explore options that fit your goals. Because when you understand the difference between land loans and home loans, you’re better equipped to make a smart, confident decision.
How Much Land Can You Afford? A Simple Guide to Land Loan Calculators
One of the first questions we hear from buyers is, “How much land can I afford?” It’s a great question—and the answer starts with a land loan calculator.
This simple tool helps you estimate your monthly payments based on the price of the land, your down payment, the interest rate, and the loan term. It’s a quick way to get a realistic picture of what your budget looks like before you start shopping.
But it’s more than just numbers. Using a land loan calculator helps you plan. It helps you avoid falling in love with a property that’s out of reach. And it gives you the confidence to move forward when the right opportunity comes along.
At First South Farm Credit, we’ll walk you through the process and help you understand how different land loan rates affect your monthly payment. Whether you’re buying five acres or fifty, we’ll help you find a financing plan that fits your goals—and your wallet.
Why Buying Land in the South Is Still a Smart Investment in 2025
In a world of economic uncertainty, land remains one of the most stable and rewarding investments you can make—especially here in the South.
We’ve seen it time and again. While markets rise and fall, land holds its value. It’s tangible, it’s limited, and it’s deeply rooted in the communities we serve. Whether you’re buying for recreation, farming, or future development, Southern land continues to offer long-term potential.
General Appraiser Jake Marien, a Louisiana Certified Appraiser highlights the long-term value and opportunities of investing in land.
“The southern United States is unique as there are many instances where one property has multiple uses. An individual can buy a tract of land that provides both income generating potential along with excellent recreational potential. The interest rate environment is as competitive as ever for land loans and a borrower has the ability to work with their Loan Officer to find a loan term and rate that meets their own personal needs. Land is special in the aspect that you can watch the investment grow while you grow along with it.”
And in 2025, it’s still a smart move. Interest rates for land loans remain competitive, especially when you work with a lender who understands the rural market. At First South Farm Credit, we offer flexible terms and personalized service to help you make the most of your investment.
So if you’re looking for a place to grow your future—literally and financially—land in the South might be the opportunity you’ve been waiting for.