Buying land in Maryland: what lenders look for.

Most lenders won't touch land, and the ones who will are careful about it — because land has no income, no building to value, and a slow resale if a deal goes wrong. That doesn't make it a bad investment. It makes due diligence everything. If you understand what a lender checks, you'll buy better parcels and get financing that others can't.

Buildable lot vs. raw land — the distinction that matters

Not all "land" is the same asset. A recorded, buildable lot — with utilities and road access at the frontage and zoning that allows what you want to build — behaves like real, valuable collateral. Raw or unimproved acreage that still needs entitlements, a Public Works Agreement, or utility extensions before anyone can build is a different animal: harder to value, slower to sell, and much harder to finance. We lend on buildable lots — see land & lot loans for how we approach them.

What a lender checks before funding land

• Is it buildable today? A recorded lot with water, sewer, and road at the frontage is fundable. Acreage that needs a Public Works Agreement first is a much heavier lift.
• Access. Not whether a street shows on a plat — whether there's a road you can actually drive to the property line.
• Utilities. Water, sewer, gas, and electric at the frontage, or the real cost and timeline to bring them there.
• Zoning & density. What can actually be built, verified against the county code — not what a listing claims.
• Location & market. What finished lots sell for nearby, and who the buyers are.
• You and your plan. Experience, liquidity, and a repayment plan that doesn't depend on something that hasn't started yet.

Your own due-diligence checklist

Before you buy — and before you ask a lender — confirm:

1. Deed, plat, and clean title. Know exactly what you're buying and that it's free of liens or easements that block your plan.
2. Zoning verification. Call the county and confirm the use and density in writing.
3. Utilities and access. Confirm what's at the frontage and get real quotes for anything that isn't.
4. Perc test (if on septic). No perc, no septic, no house — this one kills deals.
5. Survey. Know the real boundaries and any setbacks or floodplain.
6. Environmental (commercial parcels). A Phase I ESA flags contamination risk before it becomes yours.

How land loans are structured

Because land is riskier collateral, expect lower leverage than a house — typically up to 50% loan-to-value on buildable lots, on a short term. Pricing is quoted per deal. The upside: few lenders compete here, so a strong parcel and a clear plan get funded when a bank would simply say no. For the fundamentals of how private lending works, see how hard money loans work.

From lot to build

Many land buyers are really planning to build. If that's you, line up your construction financing thinking early — the draw schedule, the timeline, and the exit all connect. See new construction financing for how the build side works.