5 Best Land and Lot Loans in Iowa


Land loans let you secure your ideal property and build a home or business later on.

Key Terms

  • Land loans are a great way to secure an ideal plot of land for an eventual construction project.
  • Land loans don’t involve paying insurance or PMI.
  • You can build on your own time with an Iowa “lot” loan.

Iowa is the quintessential midwest state, offering small town values, good neighbors and a relaxing way of life. For those looking to benefit from the quality of life in Iowa, finding a new home can be hard. Prices are rising, and many new builds and modernized homes are marginalizing the average buyer. An alternative way to find a home in Iowa can be to finance a land purchase with a land loan and then build your own home eventually with an Iowa construction loan

There is plenty of space in Iowa, that’s for certain. In fact, according to the U.S. Census Bureau, there are 55,853 square miles of land in the state. That includes large swaths of land that are ideal for building a new home. 

The good news is that land in Iowa is quite affordable, too. Per the New Estimates of Value of Land of the United States, the value per acre of land in Iowa is $6,589.83, meaning that it is quite possible to buy land and build a home for less than it might cost to buy a new or modern home. 

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How land loans in Iowa are different

If you want to construct a new residence in Iowa, you’ll need to find a suitable parcel of land. There are several types of land loans available to you. A raw land loan is required if your ideal location is completely undeveloped. If there are infrastructure elements on a site, an unimproved land loan would be required. Finally, there are improved land loans for parcels of land that are primed and ready for development.

Land loans are distinct from construction loans in that they only finance the land. You can buy a parcel while valuations are still low and then wait to build for as long as you want.

Land loans also vary from other loans in terms of interest rate. The rates on these loans can be higher; however, Iowans don’t have to pay insurance on these loans and can very likely still bring a project in well under the cost of a built home. 

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5 Best Iowa land loan lenders

If you’re ready to learn more about the best land loan lenders in Nebraska, here are the top options we’ve found through our research.

1. Citizens Bank & Trust

Based in North Alabama, Citizens Bank & Trust provides a number of services for those living in the area and looking to invest in property. Citizens Bank & Trust offers land loans and construction loans to help with the purchase of property as well as the building on property.

We reached out to Citizens Bank & Trust to discuss land loan details, which you can read about below:

  • Available for home construction or land
  • Available for primary residence or secondary home construction
  • Draw system: funds can be disbursed in stages as construction progresses
  • May roll into permanent loan, saving on closing costs
  • Local decision-making and processing

When you’re ready to connect with a loan officer, use our form to quickly match with land and lot loan programs based on your specific circumstances.

2. Lincoln Savings Bank 

Opening in 1902, Lincoln Savings Bank started in Iowa to provide services for people looking for banking and financial services. Lincoln Savings Bank offers a number of products designed to help its customers reach goals of items such as land ownership with recreational land loans.

To get you the best information, we contacted Lincoln Savings Bank for more details on their land loans and here are the key features and terms:

  • Purchase tracts for hunting, fishing or wildlife preservation
  • Fixed-rate loans mean predictable monthly payments
  • Longer-term loans available
  • Finance a wide range of acreages
  • Site improvements and buildings can also be financed
  • Our Iowa-based lenders possess local expertise in land financing

When you’re ready to connect with a loan officer, use our form to quickly match with land and lot loan programs based on your specific circumstances.

3. Kerndt Brothers Savings Bank

Founded by brothers, Kerndt Brothers Savings Bank is a community bank originating in Lansing, Iowa. From its founding in a store, as farmers left their money in the store’s safe, the bank offers a range of loans, including land loans for the purchase, refinance, or construction of commercial agricultural properties.

We reached out to Kerndt Brothers Savings Bank to discuss land loan details, which you can read about below:

  • Loans available for the purchase, refinance, or construction of commercial ag properties 
  • Available for owner-occupied or investment properties 
  • Repayment terms customized to fit the business’s unique needs 
  • Lending professionals with working knowledge of the local ag real estate market 
  • Local decision-making and processing 

When you’re ready to connect with a loan officer, use our form to quickly match with land and lot loan programs based on your specific circumstances.

4. 5 Star Community Credit Union

5 Star Community Credit Union is a risk-based lender serving Iowa. The credit union provides personal loans, auto loans, and recreational vehicle loans, as well as land and lot loans for the construction of residential projects. With two loans in Mt. Pleasant and W. Burlington, it offers competitive services.

We reached out to 5 Star Community Credit Union to discuss land loan programs, which you can read about below:

  • Credit score of 730 required for best rate
  • Minimum credit score of 550
  • VA mortgages available

When you’re ready to connect with a loan officer, use our form to quickly match with land and lot loan programs based on your specific circumstances.

5. State Savings Bank

Founded in 1894, State Savings Bank started as an agricultural bank in Iowa to meet the needs of the farmers in the region. State Savings Bank has since grown but still offers a small town feel with plenty of options for those seeking construction loans, lot loans, or permanent loans.

To get you the best information, we contacted State Savings Bank for more details on their land loans and here are the key features and terms:

  • Lot loans available if you are not yet ready to begin home construction.
  • If construction is set to begin within 12 months of the lot purchase, your payments will be interest only.
  • If construction is set to begin more than 12 months after the close of the lot purchase, your payments will be amortized allowing you to gain equity as you prepare for construction.

When you’re ready to connect with a loan officer, use our form to quickly match with land and lot loan programs based on your specific circumstances.

Does an Iowa land loan make sense for you?

If the idea of building a home in Iowa appeals to you and works for your family or business, you should consider whether a lot loan makes sense. It can be difficult to navigate the process of applying for a land loan in Iowa on your own. This is why we recommend contacting an experienced loan officer who has many years of professional experience guiding people just like you through the process of obtaining a land loan in Iowa, from application to building your dream home. Sometimes competitive interest rates are better found for agricultural land loans when you do your research about different loan types. Farm loans may help you with cash flow to get things started.

If you need to get into a home quickly, you might be better off with a down payment for a traditional mortgage loan or taking out lines of credit to get there. That home is already built, so traditional real estate loans are better aligned with your needs. Using calculators to check things out like loan amounts with variable rates could tell you if a traditional loan or a land loan is better for you.

Knowing the loan terms and payment options will help you arrive at a decision about the best loan application for you to pursue. For beginning farmers or ranchers in Iowa, this can be a great way to get started and to build your property on the land as you go with your farming operation. You may want to look into what’s required for underwriting or refinancing so that you’re clear about how land loans and farm loans work through the duration.

Don’t waste time attempting to understand all of the requirements and regulations that must be met in order to obtain a land loan in Iowa. There are seasoned professionals that can help you navigate the process. 

If you’re looking to explore land and lot loans in other states, check out our national overview of land loans as a starting point in your search.

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Joshua Holt

Joshua Holt is a licensed mortgage loan originator (NMLS #2306824) and founder of Biglaw Investor. His mortgage expertise lies in the areas of professional mortgage loans, particularly for lawyers, doctors and other high-income professionals. Prior to Biglaw Investor, Josh practiced private equity mergers & acquisition law for one of the largest law firms in the country.

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