- Land loans allow borrowers to secure land more affordably in expensive areas than jumbo loans or traditional mortgage loans.
- You can then build a home or business on that land when you want.
- Land loans don’t require that you get insurance, saving you money on monthly payments.
Tiny but mighty Rhode Island is filled to the brim with charming towns like Providence, great universities, and a stunning coastline, plus it’s close to neighboring states like Connecticut and Massachusetts, offering plenty of travel opportunities. It is small, however— according to the U.S. Census Bureau, it includes just 1,033 square miles of land, making it sometimes hard to find your dream home or second home.
For some, purchasing land first and building later might be the best way to buy real estate in the state. While the value per acre of land in Rhode Island is $133,729.57, per the New Estimates of Value of Land of the United States, many residents of the state may find that buying an acre and then building their own home is still more cost-effective than buying a new or modern, pre-built home.
How can you start exploring this option? By taking a look at land loans. Also known as lot loans, these loans let you purchase land and build when you’re ready, making them slightly different from a Rhode Island construction loan.
Benefits of getting a land loan in Rhode Island
Most individuals are unaware that purchasing an empty lot is a possibility until they learn about land loans. It’s not the typical method people use to buy properties in Rhode Island, but there are several distinct advantages to doing so:
- You can buy a lot in a desirable neighborhood before prices rise, and it will cost far less than a finished home in the same neighborhood.
- When you’re ready to build, construction financing is available, and building your own house is almost always less expensive than buying one that has already been built.
- You may create the precise home you have always wanted— there’s no need to settle for one that requires extensive effort to meet your requirements.
- Many of the insurances required for traditional forms of property do not apply until you put a residence on the land.
Buying an empty lot may seem unusual at first, but it’s a creative solution to an increasingly frustrating housing market.
5 Best Rhode Island land loan lenders
If you’re ready to learn more about the best land loan lenders in Rhode Island, here are the top options we’ve found through our research.
1. Westerly Community Credit Union
Westerly Community Credit Union started in 1948 when a group of community members formed a member-owned credit union. Today they have over 20,000 members and $400 million in deposits, while offering a wide array of financial products, including home equity line of credit accounts and land loans.
We contacted Westerly Community Credit Union to learn more about its land loan program.
- Must be a buildable lot
- Maximum loan-to-value (LTV) is 75%
- Fixed and adjustable-rate-mortgages available
- Minimum FICO credit score is 670
2. Coastal1 Credit Union
Coastal1 Credit Union is a local lender who has more than $2.6 billion worth of assets. Located in Rhode Island, this member-owned credit union offers a range of business and personal banking options, including land loans with up to 30-year amortization. They also offer low-closing cost, 90%-financing on construction loans.
We reached out to Coastal1 Credit Union to discuss land loan details, which you can read about below:
- 30-year amortization loan terms available
- Free interest rate lock
- Multiple programs available for land loan purchases
3. Country Living Loans
For more than 100 years, Country Living Loans from Farm Credit East have provided access to farm, land, and country home financing throughout the Northeast portion of the U.S. A customer-owned mortgage lender, they specialize in rural landscape projects, including land and lot loans for farms or other needs.
We reached out to Country Living Loans to discuss land loan details, which you can read about below:
- No acreage limits.
- Available for farm loans (with or without a home structure).
- Country properties, including farms, bare land, timberland, home lots and more.
- Can also finance multiple parcels and properties with more than one deed or several tax parcels.
- Long-term fixed rates available.
- Rural expertise.
4. TD Bank
TD Bank is a full service bank that offers all types of financial products, including investments, wealth planning, and private banking services. TD Bank does have a large lending ability in which loans can be obtained for property and land purchases and the purchase and renovation of a home.
We reached out to TD Bank to discuss land loan options, which you can read about below:
- Can finance land purchases as part of construction project
- Construction loans with interest-only payments during the construction phase
Incorporated in 1855, BankFive is one of the many SouthCoast independent community banks offering land and lot loans to potential homeowners. With 13 full-service branches and 4 lending offices in Massachusetts and Rhode Island, it is no surprise that BankFive offers a land and lot loan program for potential homeowners in the region.
We asked BankFive for more details on their land loan rates and here is what they said:
- Land and lot loans available for land and lot purchase for both investors and homeowners
- Offers Construction loans for the typical single-family home-building process
- Rehab Loans available for financing fixer-upper and renovations
When you’re ready to connect with a loan officer, use our form to quickly match with land and lot programs based on your specific circumstances.
Does a Rhode Island home land loan make sense for you?
If you’ve been looking for your dream house for a long time and aren’t having any luck, building your own on an empty lot might be the perfect answer.
Similarly, if you know you’ll want to develop in the future and want to lock in today’s land costs, this is a great option. A down payment will be required, but it will most likely be less than the down payment on a home.
Whether it’s your primary residence or a weekend retreat, selecting unoccupied property to build on later is a terrific approach that keeps all of your options open and lets you get creative with your new home.
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.
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.