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December 9, 2025
Introduction
Land is often one of the most overlooked sources of borrowing power. If you own land, whether it’s farmland, a vacant lot, or a developed parcel, you may be sitting on usable equity without realizing it.
Borrowing against land lets you access cash without selling the property. It’s commonly used for development, business expenses, new investments, or consolidating higher-interest debt. This article breaks down how it works, what lenders look for, and when it makes sense.
What Is Land Equity?
Land equity is the difference between what your property is worth today and what you still owe on it. If your land is worth $200,000 and you have a $50,000 loan balance, you have $150,000 in equity.
How much of that equity you can borrow depends on a few factors:
Location and zoning: Land near growing cities or zoned for commercial or mixed use tends to qualify for higher loan amounts.
Level of development: Utilities, road access, grading, and permits all increase value.
Market conditions: Local demand and recent comparable sales matter more for land than national trends.
Because land is harder to sell than homes, lenders are more conservative with valuations and loan limits.
Ways to Borrow Against Land
Land Equity Loan
This is a lump sum loan with fixed payments over a set term, often 5–20 years. It’s best if you know exactly how much you need and why.
Loan-to-value (LTV) limits usually range from 25% to 50%, depending on how developed the land is. Rates are higher than mortgages but typically lower than unsecured loans.
Land Equity Lines of Credit (LELOC)
A LELOC works like a HELOC, but the collateral is land. You can draw funds as needed during a draw period and only pay interest on what you use.
These are useful for phased projects or uncertain expenses, though rates are often variable.
Cash-Out Refinance
If you already have a land loan, refinancing into a larger loan lets you pull out cash while replacing the original debt. This works best if the land has appreciated or your financial profile has improved.
What Lenders Look For
Borrowing against land is harder than borrowing against a house. Expect stricter requirements:
Credit score: Most lenders want at least 680; better terms usually start around 720.
Equity: Raw land often caps out at 50% LTV. Improved land may reach 75%.
Income stability: Lenders want clear proof you can service the debt, especially since land doesn’t generate rental income by default.
Appraisal and due diligence: Land appraisals focus on comparable sales and potential use. Environmental reviews may be required.
Common Uses For Land Equity
Land-backed loans are often used for:
Buying additional property or adjacent parcels
Funding land improvements or development
Reducing construction loan down payments
Expanding a business or farming operation
Consolidating higher-interest debt
The goal is that the borrowed capital should either increase income, improve cash flow, or raise the land’s long-term value.
Alternatives to Land-Backed Loans
If land financing isn’t a fit, other options include:
Traditional land loans (often shorter terms and higher rates)
Seller financing, which can be more flexible
Home equity loans or HELOCs to fund land purchases
SBA 504 loans for business-related land and construction
Asset-backed alternatives, such as borrowing against Bitcoin and crypto, investment portfolios, or other assets
For example, some investors use Bitcoin-backed loans at secure platforms like Arch to access liquidity without selling appreciating assets, keeping both real estate and crypto exposure intact.
How to Get Started
Estimate your land’s current value using recent comparable sales
Calculate how much equity is realistically borrowable
Compare lenders, local banks often outperform national ones for land
Prepare documentation (deed, survey, income, tax returns)
Review loan terms carefully, especially LTV limits and rate structure
Conclusion
Land doesn’t have to be a passive store of value. When used thoughtfully, it can be a source of capital that supports new investments, development, or business growth without selling a scarce and appreciating asset. The key is being conservative: understand what the land is truly worth, borrow only what you need, and structure the loan with a conservative margin of safety.
Used correctly, land equity can provide flexibility, liquidity, and leverage without giving up ownership of the land itself.
About Arch
Arch is building a next-gen wealth management platform for individuals holding alternative assets. Our flagship product is the crypto-backed loan, which allows you to securely and affordably borrow against your crypto. We also offer access to bank-grade custody, trading and staking services.
Disclaimer: This article is for informational purposes only and does not constitute investment or tax advice. Cryptocurrency investments are volatile and risky. Always conduct your own research before making investment decisions.