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Understanding How Land Loans Work for Property in Pensacola

Often, buyers that start out seeking the perfect home determine that their best option is to build their own house and find themselves in the Pensacola land market. Other buyers are seeking land for commercial reasons that no existing property will suit. No matter what your purpose for the land, it’s crucial that you understand how land loans work for property in Pensacola.

Title and Survey

Obtaining a title search will help you know that your property will be clear of any liens. You must take steps to ensure that you can legally use the land as you wish. It’s essential to have a survey to define what you are buying clearly. Often, new land sales are from the sale of a smaller tract from a larger parcel. Providing the lender with a land survey and proof of due diligence regarding any restrictions in access or zoning will speed the process and work in your favor when approaching a lender. A survey will also provide the lender information about the flood zone and if flood insurance will be required. The lender will want to ensure that you have access to the land and the existence of any easements.

Land Use 

The way mortgage loans on property with existing improvements, such as homes or commercial buildings, and how land loans work for property in Pensacola are two very different ball games in the lender’s eyes. There are varying types of land loans based on the planned use and the timing of any construction. There are typically three types of land loans: raw land loans, unimproved land loans, and improved land loans. Raw land is entirely undeveloped without utilities or roads. Unimproved land is similar to raw land, having utilities accessible but no meter yet installed. Improved land or developed land will have roads, utilities and is typically more expensive yet easier to finance.


While the value of homes or other buildings is relatively easy to determine, a piece of land is not so cut and dry because there is no physical collateral. For this reason, these lenders look for good credit where land is involved. The lender is taking a more considerable risk with land loans for property in Pensacola. As a result, you pay more interest as well. However, the interest rate for the primary residence will be lower than if the loan is for commercial property. When you apply for land loans for property in Pensacola, you must also make a larger down payment on the land. 


So now, where do you go to obtain a loan for land in Pensacola? You would approach attaining a land loan in much the same way as a mortgage and from the same type of lender, from a community bank or credit union in Pensacola. However, depending on the intended use, there may be other options for you to explore.  The approval process is much like that of obtaining a mortgage. Seller financing may be another option, especially when an owner is subdividing a large tract for development. For rural areas, if you are building a primary residence, there are USDA loans available. SBA 504 loans may be well suited to your needs if you are in the Pensacola market for commercial purposes, from the Small Business Administration SBA.

Are you looking for land loans for property in Pensacola? You can turn to experts like the pros at Greg Buys Houses to help guide you to the right loan and the best land for you in Pensacola. At Greg Buys Houses, we have a steady supply of land inventory available! Call Greg Buys Houses at (850) 979-0031 or send us a message today!

Greg Baker

Greg is a resident of Pensacola, FL and has been investing in real estate since 2004. Greg Baker is the passionate founder of Greg Buys Houses, a trusted and reliable cash home buying company based in the beautiful city of Pensacola, FL. With a heart for helping homeowners facing difficult situations, Greg strives to provide personalized solutions that work for each unique situation. He understands the stress and uncertainty that can come with selling a home, and his commitment to honesty, transparency, and empathy has earned him a reputation as a caring and knowledgeable professional. Whether you're facing foreclosure, divorce, or just need to sell quickly, Greg and his team are here to guide you every step of the way.

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