Florida land loans for vacant land, lots and teardowns

Who lends on Florida land, and who the loan is for

Most Florida land loan programs a buyer finds first are run by banks, credit unions and Farm Credit associations, and many are built around a home the buyer will live in. Among the Florida lot and land programs checked for this page, some lend only on land for personal use or on non-commercial land, some cap the parcel at 5, 10 or 20 acres, one is designed for a primary or second home, and credit unions lend to their members. None of that is a judgment on the land. It is a judgment on the purpose, and an LLC buying a lot to build and sell has the wrong one for those programs.

A private land loan is written for that borrower. It is made for business purposes to an investor or builder, often through an LLC, and it is underwritten on the parcel and the exit, meaning the build, sale or refinance that repays it, more than on income. It costs more than a credit union lot loan and runs for months rather than years. Hard money land loans in Florida sets out the published terms, and the lot loan, land loan and construction loan comparison sorts out which of the three a plan needs.

• Investors buying an infill lot or a teardown to build one to four units to sell or rent.
• Builders who need to own the lot before the plans, permits and builder’s risk policy exist.
• LLCs and other entities buying land that is not for personal use.

How a land loan works in Florida, from contract to construction

A land loan pays for a lot with no house on it, and it is repaid by an event rather than by decades of payments. On a private loan that event is usually the construction loan, once plans and permits are in hand, or a sale. A bank or credit union lot loan often carries a balloon due after a few years, refinanced into a construction loan or paid off when it arrives. In Florida the work in between runs in this order, and the sections below cover the rules behind each step.

• Contract: leave a due diligence period long enough for the checks below, and keep the deposit refundable until they are back.
• Title and survey: order the title commitment and a boundary survey when the contract is signed. The survey shows where the lines, the easements and the access actually are.
• Septic or sewer: without a sewer line, the county health department office permits the septic system, and the lot size and the water source decide whether one fits at all. The perc test, septic and well guide covers the testing.
• Zoning, flood and wetlands: confirm what the zoning allows today, read the flood zone and base flood elevation, and find out whether a wetland line crosses the lot.
• Utilities: learn how far power, water and sewer actually run. The distance to a connection is often the number that decides the deal.
• Closing: Florida taxes the deed, the note and the mortgage separately, and the Florida land loan calculator prices the stamps, the intangible tax and the title premium.
• Construction: once the plans, permits and builder are settled, the construction loan pays off the land loan. Buying land with a construction loan explains why the lot usually comes first.

Down payment and credit on a Florida land loan

Published Florida terms split by lender. Bank, credit union and Farm Credit lot loans commonly ask 20 to 30 percent down, and the lowest published down payment among the Florida programs checked for this page is 20 percent; none of them advertises 10 percent down. Credit counts in the ordinary way: national guides put lot loan minimums in the high 600s to low 700s, one Florida credit union publishes a minimum of 680, and debt to income is checked as well.

Private terms run the other way. Published Florida private land loans lend about 50 to 60 percent of current value, which leaves 40 to 50 percent of the price to the buyer, and several Florida private lenders say a low score or a short credit history will not by itself rule a file out, though some still pull a report to look for major events. The lot moves the number more than the score does: how much down on a land loan works through why, and land loan rates covers what each kind of lender charges.

These are published market figures, not an offer. Entrusted Capital’s terms come from the person underwriting the file, and a quote starts on a soft credit pull, which does not affect a score.

Septic, sewer and the size of the lot

Most raw Florida land has no sewer line in front of it, so the first question about a lot is whether it can carry a septic system. Section 381.0065 of the Florida Statutes bars anyone from constructing, repairing, modifying or operating an onsite sewage system without a permit. The Department of Environmental Protection has run the program since July 1, 2021, and county health department offices still issue the permits and do the inspections.

The statute ties the system to the size of the lot and the source of the water. A lot served by a private well needs at least half an acre. A lot on a public water system can carry a system at no more than four lots per acre. The system also has to sit set back from wells and water, which on a narrow infill lot can decide where the house goes.

• Private well: a lot of at least one-half acre, under section 381.0065(4)(c).
• Public water: no more than four lots per acre, under section 381.0065(4)(d).
• Setbacks: 75 feet from a private drinking water well, and 75 feet from tidal and permanent fresh surface waters.
• Where a public sewer becomes available, an owner on septic can be required to connect within 365 days of written notice under section 381.00655.

Wells are permitted before they are drilled

Florida delegates well permitting to its five water management districts, which may hand it on to a county or a county health department. Under section 373.308, a permit is needed to locate, construct, repair or abandon a water well, and one district states plainly that every well must be built by a Florida licensed water well contractor.

For a lot, the practical point is order: the well and the septic system are permitted against each other, because the setback between them is fixed. Site the two together, before a buyer or a builder assumes either location.

The flood map decides how high the house sits

Florida builds to one statewide code, and its flood provisions are stricter than the federal minimum. Section R322.2.1 of the residential code requires the lowest floor of a building in a flood hazard area to sit at or above the base flood elevation plus one foot, or the community’s design flood elevation if that is higher. The Division of Emergency Management’s guidance on the current eighth edition repeats the same rule.

That extra foot is fill, stem wall or piers, and it is cost the lot carries before anything is built. On an infill lot with an older house, the same code treats work costing 50 percent or more of the structure’s market value as a substantial improvement, which brings the flood provisions into play for the old house too. That rule can tip an older house toward a teardown rather than a renovation.

• Read the flood zone and base flood elevation from the effective flood map before pricing the lot.
• Ask the county or city floodplain administrator whether the community requires more than one foot of freeboard.

Wetlands, even inside a platted subdivision

The Department of Environmental Protection warns that many Florida subdivisions were platted before wetland, stormwater and flood rules existed, so even a lot in a recorded subdivision may include regulated wetlands. Wetlands cannot be identified by vegetation alone: some pines and oaks grow in both uplands and wetlands, and some wetlands rarely show standing water.

Filling a wetland for a house pad or a driveway can require an Environmental Resource Permit, processed by the department or one of the five water management districts, and the state’s method for drawing the line is set out in chapter 62-340 of the Florida Administrative Code. A lot that is mostly upland can still lose its best building site to a wetland boundary drawn after closing.

Teardown lots: the demolition comes first

A single residential building with four or fewer units is generally outside the federal asbestos notification rule the Department of Environmental Protection enforces, but not if it is one of several buildings demolished as one project, was ever used commercially, or is coming down to make room for a commercial building. County programs can add their own requirement: one county asks for a demolition notice 10 working days before every demolition, asbestos or not.

An older house can also come with debts a buyer does not expect. A code enforcement order imposing a fine becomes a lien once it is recorded under section 162.09, and open permits or violations may not appear in the land records at all, which is why a municipal lien search belongs in a teardown file.

Legal access, and the parcel with no road

A path people have always used is not access. Florida does recognize a way of necessity: an implied one where the landlocked parcel and its neighbor were once held under a common title, and a statutory one under section 704.01 for land used or intended for a dwelling or for agriculture that is hemmed in with no practicable route to a road.

Neither one is a closing document. Under section 704.04, if the neighbor objects, the dispute goes to circuit court, which decides where the easement runs and what the landlocked owner pays for it. A lot that depends on one should be priced as a lawsuit with a lot attached.

Agricultural land and the tax bill that follows

Rural parcels are often assessed as agricultural land, which can make the current tax bill look far smaller than the next one. Under section 193.461 only land used primarily for bona fide agricultural purposes keeps the classification, the owner applies by March 1, and the property appraiser reclassifies land diverted to a nonagricultural use. Building on former pasture ends the agricultural use, and with it the classification.

Florida closing costs on a land loan

Florida taxes the deed, the note and the mortgage separately. The deed is taxed at 70 cents per $100 of price under section 201.02, or 60 cents in Miami-Dade, where a 45 cent surtax also applies to any deed that is not a single-family residence; on the Department of Revenue’s wording, a vacant lot does not qualify for that exception. Standard Florida contract forms put the deed tax on the seller, though every party to a deed is liable to the state.

The loan adds documentary stamps of 35 cents per $100 on the note and mortgage under section 201.08, and a one-time intangible tax of 2 mills on debt secured by Florida real property under section 199.133. Title insurance premiums are set by state rule, not by the title company, so the premium is the same at every agent and only the closing and search charges differ.

• A $150,000 lot outside Miami-Dade: $1,050 of deed tax.
• A $100,000 loan on it: $350 of documentary stamps and $200 of intangible tax.
• Owner’s title premium on $150,000 at the promulgated rate: $825 ($5.75 per $1,000 to $100,000, then $5.00 per $1,000).
• Property is assessed as it stands on January 1, and taxes paid in November take a 4 percent discount, so the proration at closing depends on the month.

Funding Florida land

Entrusted Capital is a direct lender that funds raw and infill lots in Florida for one to four units with its own capital, teardown lots included, before plans, permits or builder’s risk insurance exist, and the decision is made in house. Every loan is for business purposes on non owner occupied property, made to investors and builders, including through an LLC, and a pre-approval for the ground up construction refinance is part of the land file, because the build is how the land loan is repaid. The construction loan itself is placed with institutional lenders.

• The parcel: the survey or plat, and anything standing on it that has to come off.
• The flood zone and base flood elevation, and the septic or sewer answer.
• Legal access, and how far power and water actually run.
• The exit, specific enough to test: the build, the builder and the refinance.
• Your entity documents, if the lot is being bought in an LLC.