Lot and Land Loans in California: Your Gateway to Custom Development
California’s got some of the best land opportunities you’ll find, whether it’s that custom home you’ve been doodling on napkins or a development play that could really pay off. Raw land in the Central Valley? Improved lot in the Bay Area? Ag property for a family compound? With the right financing, you can stop dreaming and start doing. Planning to build? You’ll want to look into construction-to-permanent loans when the time comes.
Understanding California Land Loans
Land loans aren’t like regular mortgages. They’re trickier because vacant land scares lenders. And honestly? They should be nervous.
No rental income. Permits that might never happen. Values that bounce around like crazy. Finding comps? Ha! And here’s the kicker: you could own that dirt for years without making a dime off it. So yeah, expect bigger down payments and shorter terms. It’s just how this game works.
Types of Land and Lots We Finance
Raw Land
Wilderness time. We’re talking zero (and I mean ZERO) improvements. No water. No sewer. No power. Sometimes not even a road you’d trust your truck on.
Why do you need 30-50% down? Because lenders look at raw land and see nothing but risk. They’re not wrong. You’ll get maybe 5-10 years to pay it off, and the rates? Ouch. Highest in the game.
Improved Building Lots
Now we’re getting somewhere. The road exists. Utilities are within shouting distance. Someone actually surveyed this thing. Permits might not kill you.
You’re looking at somewhere between 20 and 35% down, depends on the lender’s mood and your credit. Terms usually land around 10 to 15 years. Rates are tolerable. Not great, but you won’t need therapy.
Developed Lots
This is the “I don’t want drama” option. Everything’s already connected: utilities, paved road, graded dirt. Some even come with permits already pulled.
Down payment can be as low as 10% if you’re well-qualified (25% is more typical). Terms stretch up to 25 years. Best rates you’re gonna find for land. Why? Because there’s almost no risk left.
Agricultural Land
Farm and ranch territory. You’re in A1, A2, or RA zoning land now. Minimums are usually 5 acres or more. Maybe there’s already farming happening. Water rights can make or break these deals. Seriously, don’t skip that research.
Down payments float between 25 and 40% depending on what you’re buying. USDA has programs if your property qualifies and you meet income limits. Worth checking out.
California Zoning Basics
You’ve got to understand zoning before you buy. It’s non-negotiable. R1 zones are single family only (though many areas now allow ADUs). R2 and RM zones let you go multi family, which opens up investment angles but comes with more red tape.
Agricultural zones (A1, A2) need minimum 5 acre parcels and water rights can make or break your deal.
Here’s what kills most people’s timelines: permits. Simple lots? Figure 3 to 12 months. Complex projects with environmental reviews? You’re looking at 1 to 3 years, maybe more if there are appeals. Don’t forget another 6 to 18 months for infrastructure if you need utilities and road work. For help with the purchase side, check out our purchase loan options.
Regional Land Markets
Bay Area
Want California’s priciest dirt? Here you go. Lots run $300K to north of $2M. Quarter acre to one acre, usually. Environmental rules that’ll make you weep. But nail it? You’re in the high end custom home game with appreciation that never quits.
Los Angeles County
LA’s weird. Urban lots go $150K to $800K. Suburbs run $100K to $500K. Rural spots are $50K to $300K. Every city writes its own rulebook. Growth areas can pay off big if you guess right.
Central Valley
Affordability central. Residential lots range $30K to $150K. Ag land goes $10K to $50K per acre. Permits actually move. Population’s climbing. Your wallet survives. New to land? Start here.
Mountain and Desert Regions
Bargain basement prices. Desert starts at $10K, mountains run $20K to $200K. The problem? Water and utilities. Figure those out and you’ve got recreational or retirement gold.
What You’ll Need to Qualify
Your credit score? Aim for 650 to 680 minimum. Got 720 or better? You’ll get way better terms. Employment history matters. Lenders want to see at least 2 years of steady work. And cash? You need your down payment PLUS 6 months of reserves sitting there. Remember, no rental income’s coming in to help.
The land itself needs to pass the smell test. Is it properly zoned for what you want? Can you actually get permits without fighting city hall for 3 years? Are utilities available, or at least possible to connect? Is there real road access? Clean title? No toxic waste surprise? Soil that won’t collapse when you dig? You know, the basics that save you from disaster.
Down payments? They’re all over the place. Raw land needs 30 to 50% (lenders hate risk). Unimproved lots want 25 to 40%. Improved parcels drop to 20 to 35%. Developed lots can go as low as 10%, though 25% is way more common.
Planning to build soon? Most people transition to construction financing within 3 years. Some lenders do land-to-construction packages with just one closing, which honestly saves you a ton of paperwork headaches.
Working with A Good Lender
We’ve been doing California land deals for nearly four decades, so we’ve seen everything. The deals that fly and the ones that crash and burn. We know which lenders actually do land financing (it’s fewer than you think), how California’s zoning maze works, and where the hidden costs pop up.
Our process is straightforward:
- Figure out if the land works — development potential, regulatory headaches
- Plan your financing — optimal structure, down payment strategy
- Match you with the right lender — not all of them do every land type
- Guide you through due diligence — this is where deals die if you skip steps
- Set up your construction transition — if you’re planning to build
Frequently Asked Questions
What’s the difference between a lot and land loan?
People use these terms interchangeably, but “lots” usually means surveyed, platted parcels ready to build on, while “land” might be totally raw and need major development work.
Can I build right away after buying?
Depends what you bought. Developed lots? Maybe. Raw land? Not a chance – you’ll need site prep, utilities, permits, and probably a lot of patience.
What about investment properties?
Sure, but expect stricter qualification and bigger down payments.
I want to buy now, build later?
Many land loans let you wait, though some want you building within 3 years. Talk to your lender about your timeline before you sign anything. For more questions, check our FAQ page.
Is a Land Loan Right for You?
Owning land is awesome. It’s your blank canvas for custom development, long term investment, or that lifestyle change you’ve been dreaming about. But let’s be real: it takes solid planning, proper financing, and honest expectations about how long things actually take.
Land loans make sense when:
- You’ve got specific plans and a realistic timeline
- You understand the zoning and permit game
- You can afford the down payment plus development costs
- You’re okay making payments without rental income
- You know development’s going to throw curveballs
Maybe look at alternatives if:
- Your budget’s too tight for both down payment and development
- You’ve never dealt with permits and regs before
- You need cash flow right away
- The market’s not cooperating with your timeline
Ready to Own Your Perfect Building Site?
Land’s one of those foundational investments. Literally the ground under your future home, business, or investment portfolio. Whether it’s a small building lot for your dream house or a bigger parcel for development, the right financing makes it happen.
We get California’s land markets. All of them. Bay Area chaos, Central Valley opportunity, desert infrastructure nightmares, you name it. We’ll walk you through the financing options, help you understand what the land can actually do, and plan for success without the rose colored glasses.
Ready to talk land financing? Let’s discuss your specific goals and figure out how to get you that perfect property.