Loan structure
Land development loans, matched to your deal
A land development loan funds the horizontal work that turns raw or entitled land into finished lots or pads: grading, roads, utilities, drainage and the other infrastructure that has to exist before anything vertical can start. It is released in draws against completed work and repaid as lots are sold to builders or rolled into a construction loan. Fewer programs do it than do vertical construction, and the ones that do disagree sharply on entitlement, absorption and takedown terms, which is why one site file deserves several answers.
- 5,000+loan programs screened
- 5–8matches on a typical deal
- $0 upfrontto submit and compare offers
- 0.50–1.00%broker fee, paid only at closing
Who is a land development loan actually for?
Developers preparing a site for sale to homebuilders or for their own vertical phase: a subdivision being brought to finished lots, a commercial or industrial park being platted and served with utilities, or a master-planned parcel moving through its first infrastructure phase. Buying land and holding it unimproved is a land loan; building on it is a construction loan. Development financing is the work in between.
What do land development lenders disagree about?
Entitlement risk and the takeout. Programs take different views on how final the approvals must be before the first draw, how much of the land basis counts as equity, whether builder lot-purchase contracts are required before funding and how firm those contracts must be, and how fast the finished lots will absorb. They also treat cost overruns differently, because site work carries risks below the surface that a vertical budget does not. Two lenders reading the same plat can land far apart on all of it.
What should be ready before a land development file goes out?
The entitlement status with any conditions still outstanding, the engineered site plan and a line-item horizontal budget with contingency, the civil contractor and the form of contract, any builder takedown or option agreements with their schedule, and a clear statement of the exit, whether that is lot sales or a vertical phase. Files that arrive with the absorption schedule already reconciled to the draw schedule get taken seriously faster, because that is the first thing a development desk tests.
How does getting matched actually work?
You describe the deal once — about five minutes — and it is screened against 5,000+ loan programs. Most deals return 5–8 matches, and the median first offer arrives in under an hour. There is $0 upfront; the fee is 0.50–1.00%, paid only at closing.
YieldStack is a commercial mortgage brokerage, not a lender. The rate, the leverage and the credit decision belong to the lenders competing for your deal; our job is making sure the right ones see it at the same time, so the terms you compare are real competition rather than one desk’s appetite.
What do lenders actually look at?
Every program weighs these in its own way — which is the argument for several quoting at once.
- Entitlement status and what approvals remain outstanding
- Whether builder takedown contracts exist and how firm they are
- The horizontal budget, its contingency and the civil contractor's record
- Absorption assumptions against nearby lot sales
- How the exit is timed against the draw schedule
Frequently Asked Questions
How is a land development loan different from a land loan?
A land loan finances holding the parcel. A development loan finances improving it, funds in draws as the site work is completed, and expects to be repaid from lot sales or a construction phase.
Do I need builder contracts before I can get financed?
Many programs want them, some require them, and a few will fund on speculative absorption for an experienced developer. It is a program rule, and it shapes leverage.
Can the land purchase be included?
Often, where the entitlements are far enough along. Some programs fund acquisition and horizontal work together, and an acquisition, development and construction facility can carry all three phases.
How are draws released on site work?
Against inspected, completed work, usually by the engineer's certification, with utilities and paving tracked as separate line items. Interest accrues on the drawn balance rather than the full commitment.
What if the approvals are not final yet?
Some lenders will fund the entitlement phase itself, usually as a land or bridge loan, with the development facility following once approvals are in hand. The file should say exactly what is still pending.
What is the exit for a development loan?
Lot sales to builders under takedown contracts, or a vertical construction loan that repays it. Lenders test that exit before funding, so it belongs in the file from the beginning.
Is YieldStack a lender?
No. YieldStack is a commercial mortgage brokerage, not a lender. Every term sheet comes from a lender in the network and is subject to that lender's underwriting.
Does it cost anything to see terms?
No. It costs $0 upfront to submit a deal and review offers; YieldStack's broker fee is 0.50–1.00% of the loan amount and is paid only at closing.
Is financing guaranteed?
No. Every credit decision is made by the lender; YieldStack arranges the introductions and negotiates on the borrower's side, and no loan, rate, or closing is guaranteed.
Next step
One deal.Several lenders.
YieldStack is a commercial mortgage brokerage, not a lender.