Financing Services

Land Acquisition Financing

Whether you are looking to escape the city to build the home of your dreams, or wish to build multiple homes, a subdivision, or a commercial or industrial building, you will likely require a land loan.

Securing the financing required to purchase land is slightly more complex than applying for a mortgage, or alternative loans. Firstly, there’s no home or building to act as collateral for your loan. This increases the risk of investment for lenders compared to already established properties. Land can be divided into two distinct categories, depending on your intended purpose.

Land to be held long-term for future development

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Four crucial considerations to bear in mind when buying  land for development purposes 

  1. The cash requirement to purchase vacant land
    Lenders do not typically grant money in advance for the purchase of land or make deposits with builders. As such, you will require enough cash to cover the down payment for the value of the land.
  2. The required criteria of the property for financing
    Lenders view your property as security to move forward with the transaction. Lenders seek security in knowing that if you fail to pay, they will be able to sell the property to recover their loss. Understandably, a property that doesn’t have services or lacks an access road may be more difficult to finance. In addition, the type of home or project you aspire to build is a key determinant in securing your loan.
  3. The amount of experience required to complete the project
    Lenders seek to know whether you possess the experience necessary to complete your project in a timely manner and on budget. They must be confident that you won’t run out of money due to cost overruns or unforeseen events.
  4. The likelihood of your eligibility to get a mortgage as if the project already was complete
    Lenders will seek proof of sufficient revenue (personal or forecasted from the project) and credit for mortgage qualification in addition to your cash requirement.

As each project is unique, there are various ways to structure land acquisition loans to meet your needs. Contact us to discuss land financing options most suitable for your needs.

When seeking mortgage financing for
  land development , please refer to the following four requirements:

  1. The money you need to purchase and develop vacant land is approximately 5 to 7 times the minimum down payment required to purchase an existing property. This is normally referred to as your cash requirement. It is essential to know that lenders do not grant money in advance, instead they reimburse you with respect to the progress made along the way.
  2. All mortgage lenders operate based on property criteria that must be met before they agree to provide your loan. Subsequently, whether your anticipated project meets such criteria will determine the range of mortgage lenders available to you to choose from. This is what we refer to as the Property Requirement.
  3. Understandably, developing a new property poses potential risks due to the possibility of money shortages, cost overruns, or unforeseen events. It is essential that you prove to mortgage lenders that your project will proceed to completion in a timely manner and on budget. This element is coined as the Experience Requirement.
  4. It is also crucial that you qualify for the subject mortgage. Meaning, you possess sufficient revenue income and credit in addition to your Cash Requirement. Therefore, you must realize your maximum capacity to borrow to best establish your budget. This is referred to as Mortgage Requirement.


The amount of the down payment for a land purchase depends on the type, purpose, location, and creditworthiness of the land. Generally, if the land is acceptable to a private lender, you will need to put down between 25-45% or more. If you plan to develop the land immediately, Credit Unions and Banks may accept a lower down payment.

In order to purchase vacant or raw land in Ontario, you will need to provide two valid forms of identification for all applicants, a current mortgage statement, a property tax assessment notice, a purchase agreement (if applicable), and an appraisal from an approved appraiser. Additional documentation may be necessary depending on the specifics of your case.

You may be able to use other real estate you own as additional security to get a mortgage loan. This is known as a “blanket mortgage” and is usually only available through private lenders, rather than traditional or semi-traditional lenders. Traditional or semi-traditional lenders may offer this option if you have a commercial banking relationship. It can be a great short-term solution to help you reach your goals.

When purchasing vacant or raw land, it is important to be aware of any zoning laws that may apply. Zoning regulations dictate how the land can be used and the types of structures that can be built on it. For example, land zoned for agricultural use must primarily be used for agricultural purposes, unless it is rezoned. However, the rezoning process is often lengthy and costly, and there is no guarantee that it will be successful.

In Canada, you have the option of purchasing three different types of land: raw land, vacant land, and crown land. Raw land is the most affordable but requires the most work. Vacant land is more expensive but is easier to develop and finance. Crown land is only available if private land is not an option and requires approval, which can be a lengthy process with no guarantee of success.

When purchasing vacant or raw land, a private mortgage lender may be a better option than a bank. Private mortgage lenders are not subject to the same stringent regulations as banks and other traditional financial institutions, and they may not require large upfront equity payments. They have the freedom to decide what risk they are willing to take on and can work with you to find an arrangement that is beneficial for both parties.