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Lot Loans:
The Basics

Building a new home is a major financial investment, but different types of financing are available to meet individual customer needs. For instance, potential homebuyers wishing to construct their dream home in the future can take advantage of lot loans, also known as land loans.

The mortgage lending team at Bank of Old Monroe is here to simplify the loan application process. Our experts possess decades of experience assisting homebuyers to purchase, refinance, or build the home of their dreams, and they welcome the opportunity to do the same for you. Contact the branch nearest to you today!

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CAT on an empty lot

Meet Our Lending Team

Matthew Bals
Moscow Mills

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Matt Daniels
Wentzville

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Matt Arnold
Old Monroe

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Maggie Schulte
O’Fallon

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Dalton Gilbert
Troy

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What is a Lot Loan?

Lot loans finance the purchase of a land plot. Those interested in buying land to construct a home or business can benefit from a lot loan. Similar to a construction loan, which also finances building projects, lot and land loans are another option for home builders who have a vision but aren’t yet ready to begin construction.

Buyers will be required to make a down payment on the property. The amount will vary based on lot condition. Borrowers best suited for lot loans generally meet the following criteria:

  • Provide a thorough explanation of the intended use
  • Possess a clean credit score
  • Highlight necessary property checks, such as zoning, surveyed boundaries, land-use restrictions, and access to utilities

If borrowers meet all credentials, lenders determine the loan’s terms and, upon agreement, approve them. Then, borrowers are responsible to make a down payment and repay the loan. Once the qualified borrower is prepared to build, they can transition their lot loan financing into another type such as a construction loan or permanent mortgage, subject to separate underwriting.

Lot Loan Financing Options

Different types of lot loan financing options are available, allowing you to choose the best method for your financial needs. Potential financing options include:

  • Home equity line of credit (HELOC): Those with enough home equity can decide to borrow against it through a line of credit. HELOCs establish a maximum amount you can borrow from when needed, making it a great option for land purchases.
  • Local bank financing: The Bank of Old Monroe lending team has in-depth knowledge of the local market and can help you finance your project. We value relationships, customize and individualize solutions for customers, possess strong partnerships with local builders and experience.

The Pros of Lot Loans

If you’re interested in building a new home, lot loans offer numerous advantages. The most obvious benefit of applying for a lot loan is the opportunity to build the home of your dreams. Lot and land loans give homebuyers more flexibility if their building plans aren’t yet complete or circumstances don’t allow immediate construction.

Therefore, lot loans give you financing options suitable to your timeline. Suppose you’re looking at a lot in a premier neighborhood development but don’t foresee constructing your home immediately. In that case, you can apply for a land loan to secure it until you’re ready. Bank of Old Monroe’s lending team can help you obtain the financing solution that suits your financial situation and goals.

Get Started With Your Land Loan Today

Bank of Old Monroe has served customers with their banking and financing needs since 1906. Customers trust our personalized solutions, and so can you. Our lending team can help you identify and obtain the lot loan and financing method that best suits your situation and goals. 

We’re here to answer any questions you may have and guide you through the process. Contact a member of our lending team or the branch nearest you today!

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