4 Best Land and Lot Loans in Maryland

Maryland is a unique place, with lush mountains in the West and the endless expanse of the Chesapeake to the East. There’s also the appeal of the state being within easy commuter distance of the DC metropolitan area and the rapidly expanding tech center that is Northern Virginia. 

According to the U.S. Census Bureau, there are 9,711 square miles of land in Maryland, making it one of the smaller states in the region. When you put that somewhat limited supply together with the state’s key placement near DC, it’s easy to understand why homes are getting so expensive. 

Many Marylanders are stepping away from the traditional approach to homeownership and turning to land loans instead. Getting a land loan can allow you to purchase a parcel in your favorite area and then take on a construction project when you are ready with a Maryland construction loan. With prices the way they are across the state, this can actually be a cost-effective method for owning a home. 

According to the New Estimates of Value of Land of the United States, the value per acre of land in Maryland is $75,429.31. While that’s certainly higher than in some other states, financing even half an acre and a construction project can still get you there under budget. Plus, you’ll have a home you want, and won’t have to “settle.”

How land loans in Maryland are different

You’ll need to find suitable land in Maryland if you want to build a new house. You can choose from several types of land loans. If your ideal location is completely undeveloped, like much of the land you might find out in Washington County, you’ll need a raw land loan. An unimproved land loan would be required if there are infrastructure elements on a site. Finally, improved land loans are available for parcels of land that are ready for development, such as you might find in Montgomery or Prince George’s Counties. 

Land loans differ from construction loans in that they provide financing just for the land itself. You can purchase a parcel while prices are still semi-manageable in Maryland and keep it for as long as you want. When the alternative is settling for a tiny apartment or renovating an older home, this approach may be a better way to get an affordable place to live in the DMV and beyond.

4 Best Maryland land and lot loan lenders

If you’re in the market to purchase land in Maryland, consider these land loan lenders that are available for projects in the state.

1. Patriot Federal Credit Union

Patriot Federal Credit Union is a not-for-profit financial cooperative owned by its members. Chartered in 1965, available to those who live, go to school, work, or worship in Franklin County, MD, Washington County, MD, and the eastern panhandle of West Virginia. It offers land loans for up to 10 acres.

We reached out to Patriot Federal Credit Union to discuss land loan details, which you can read about below:

• 10 acres maximum lot size
• Can lend in PA, MD, WV and VA
• Maximum 10 year term for unimproved land.
• 70% loan to value maximum for unimproved land.
• Maximum term of 15 years for improved land.
• 80% loan to value maximum for improved land.
• All land loans are approved locally

When you’re ready to connect with a loan officer, use our form to quickly match with land and lot loan programs based on your specific circumstances.

2. Provident State Bank

Provident State Bank was founded on March 26, 1904, under the name of the Provident Savings Bank of Preston, Maryland. The bank was originally intended to be a savings bank but now provides services for a variety of lot loans, including raw, unimproved, and improved lot loans.

We reached out to Provident State Bank to discuss land loan details, which you can read about below:

• Residential lot loans available for construction projects
• Terms from 12 months to 5 years available
• Interest-only option available for qualifying clients
• Amortize your loan for up to 15 years, making payments more affordable

When you’re ready to connect with a loan officer, use our form to quickly match with land and lot loan programs based on your specific circumstances.

3. TD Bank

TD Bank is a full service bank that offers all types of financial products, including investments, wealth planning, and private banking services. TD Bank does have a large lending ability in which loans can be obtained for property and land purchases and the purchase and renovation of a home.

We reached out to TD Bank to discuss land loan details, which you can read about below:

• Can finance land purchases as part of construction project
• Construction loans are interest-only during the construction phase

When you’re ready to connect with a loan officer, use our form to quickly match with land and lot loan programs based on your specific circumstances.

4. Colonial Farm Credit 

Colonial Farm Credit, which is part of the Farm Credit System, was founded in 1916 and continues to be a members-borrower owned financial institution serving Eastern Virginia and Southern Maryland residents. It offers farm and country home loans, land purchase, construction, improvements, and ag-related business loans, including for farmers.

We reached out to Colonial Farm Credit to discuss land loan details, which you can read about below:

• Available for construction loans
• Available for recreational land purchases
• Available for farm acreage (timber, etc.)
• No minimum or maximum acreage limits
• We make loans for land with no buildings; we see value in open acreage
• Long-term interest rates available
• Land to construction mortgages available.
• Open land
• Building lots and home sites
• Country estates

When you’re ready to connect with a loan officer, use our form to quickly match with land and lot loan programs based on your specific circumstances.

Is a Maryland land loan the right fit for you?

Taking on a land loan and subsequent construction project requires some careful consideration. If you are considering a land loan, consider the following:

• Can you wait to move into a new home? 
• Do you have a clear idea of where you want to live and the type of home you want to live in?
• Are you okay with paying more for financing, since land loans can sometimes have higher interest rates?
• Do you have enough for a down payment?
• Are you trying to find a way to afford a vacation home?

There are many beautiful properties in Maryland available for sale on the NMLS, but you might not find exactly what you’re looking for and you might consider land loans instead. If you can’t refinance an existing property or take out lines of credit, there are other options for you. If you secure the right plot of land, check out a loan calculator to verify the loan amount, loan rates, credit score needs, closing costs, interest rates, and monthly payments in advance.

If you are comparing this against a mortgage loan for another property and trying to use that data to make your decision, you can then open your loan application for undeveloped land if you decide that is better for your dream home. You might be surprised by competitive rates for a real estate land loan as homebuyers. Find the right type of loan for you as you review all loan options and their associated loan rates, loan terms, credit score requirements, and disclosures to make your final decision.

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