If you’re thinking about buying land this year, one of the first things you’ll want to know is: what’s the average interest rate on land loans in 2025?
On average, borrowers can expect rates between 5% and 7% in 2025. That’s slightly lower than last year’s 6%–8% range, thanks to easing lending conditions. The exact rate depends on the lender, the type of land you’re financing, and your personal financial profile.
Quick Answer: 2025 Land Loan Rates
- National average range: 5%–7%
- Lowest rates: Around 5% at credit unions or Farm Credit lenders
- Higher rates: 7%–8% at big banks or for riskier raw land loans
Compared to traditional mortgages, land loan interest rates are usually 1–2% higher because lenders view vacant land as riskier collateral.
Average Rates by Lender Type
Not every lender offers land loans, and those that do set different pricing. Here’s a 2025 breakdown:
| Lender Type | Typical Rate 2025 | Terms | Notes |
|---|---|---|---|
| National Banks | 6%–8% | 10–20 yrs | Strictest credit requirements |
| Credit Unions | 5%–6.5% | 10–15 yrs | Often lowest rates for members |
| Farm Credit Lenders | 5%–7% | 15–20 yrs | Strong option for farmland and rural lots |
Rates by Land Type
Lenders adjust rates based on the type of property:
- Raw land → 6.5%–8% (harder to finance, larger down payments)
- Improved residential lots → 5%–6.5% (easier to finance with utilities/zoning)
- Farmland → 5%–7% (competitive through Farm Credit institutions)
- Recreational land → 6%–7.5% (depends on location and access)
👉 If you’re comparing costs, try this land loan rate calculator to model monthly payments at different interest levels.
2024 vs 2025: How Rates Changed
- 2023: Many lenders priced land loans at 7%–9% due to rate hikes.
- 2024: Rates eased to 6%–8%.
- 2025: Average fell to 5%–7%, offering first-time buyers a slightly more affordable entry point.
Example Payment Scenarios
Here’s what interest rates mean in real dollars for a $100,000 land loan over 15 years:
| Interest Rate | Approx. Monthly Payment |
|---|---|
| 5% | $790 |
| 6% | $843 |
| 7% | $899 |
You can run your own numbers with a land loan amortization schedule calculator.
What Influences Your Rate?
Your personal rate could fall outside the averages depending on:
- Credit score → 700+ often qualifies for the best terms
- Down payment size → 20–50% required; bigger down payments reduce risk
- Lender type → Credit unions and Farm Credit lenders usually beat large banks
- Land type → Raw land always carries higher rates
FAQs About Land Loan Interest Rates
Are land loan rates higher than mortgage rates?
Yes. Expect them to be 1–2% higher than home loans.
Which lenders usually offer the best land loan rates?
Credit unions and Farm Credit lenders generally provide the lowest interest.
Do USDA programs have better rates?
Yes, if the land is tied to a primary residence in an eligible rural area.
How much down payment lowers my rate?
Putting 30%–40% down often helps reduce interest costs.
Will land loan rates go down further in 2025?
Most experts expect rates to stabilize rather than drop significantly.
Tracey is the creator of LandLoansCalculator.com, a trusted resource for accurate and easy-to-use land loan calculators. With a strong focus on clarity and reliability, Tracey is dedicated to helping users understand land financing with confidence. Her goal is to simplify complex calculations so buyers, investors, and professionals can make informed decisions quickly and efficiently.