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Raw land loans are loans for pieces of land without any immediate plans for construction or improvements. Raw land typically involves a parcel of land without any immediate intention of making improvements such as improving access to the land, obtaining public utilities, or building some kind of structure. These types of loans are usually pretty difficult to secure and often involve higher down payments and greater interest rates because of the greater risk to the lender. Because the investment is usually longer term and speculative in nature, most banks are less likely to finance these kinds of purchases. Typically they are distributed through private lenders rather than the larger national bank chains.

As with most other types of land loans, raw land financing comes both in the form of personal investment but more commonly in the commercial form. With commercial raw land loans, it may also be possible to get financing through the Small Business Administration (SBA) if the borrower is having difficulty finding a private lender. As with all other lenders though, the borrower will likely have to show an established business credit history.

Because these types of loans are not a "one-size-fits-all" product, a borrower will likely have the most success with a private lender that is very familiar with the local area in which the land is being purchased. Another reason the larger banks tend to shy away from these kinds of loans is that it is more difficult for them to anticipate the speculative risk in such a local area, whereas things like standard mortgage loans are fairly easy to assess in terms of collateral value and the home's anticipated value in the years to come. As a result, local mortgage brokers or land financing specialist in your immediate area would probably be the most willing to finance such a purchase as they are more familiar with all of the local market variables.
 
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