Can You Get a Mortgage for Land in Canada? A Complete Guide

Many people ask me, "Can you get a mortgage for land?" The short answer is yes, but it’s not as straightforward as getting a mortgage for a home.

Lenders treat raw land differently from developed properties, and there are a few factors that can affect your loan options.

For starters, land use is important—what do you plan to do with the land? Zoning also plays a role; the land needs to be zoned for either residential or commercial use.

The location of the land is another factor—urban land may be easier to finance than land in more remote areas.

Whether you're buying rural acreage in Ontario or an empty lot in a growing city, this guide will help you understand what’s possible—and what’s not.

Let’s start.

What Is a Land Mortgage and How Is It Different from a Regular Mortgage?

A land mortgage is a loan that helps you buy land instead of a home. Sounds simple, right? But here’s where things get different.

When you buy a house, lenders have a structure they can hold as collateral. With land, especially if it's empty or raw, there’s more risk for the lender. 

That’s why getting a mortgage on land comes with different rules, higher down payments, and more conditions.

Mortgage vs. Land Loan

In Canada, land mortgages and regular mortgages follow different approval paths:

Know the Types of Land That Impact Loan Financing

Not all land is equal. Here’s how lenders usually categorize it:

• Raw land – No utilities, no services. Hardest to finance.
• Serviced land – Has water, sewage, and hydro. Easier to get a mortgage.
• Vacant land – Empty lot in a developed area. Still needs strong financials.
• Rural land – More remote. May face zoning restrictions or require private financing.

Can You Get a Mortgage for Land in Canada?

Yes, you can get a mortgage for land in Canada—but not the same way you would for a house.

Lenders want to know how the land will be used. If you're building soon, they’ll feel more confident. But if it’s just for future investment or recreation, you might face more hurdles.

Here are a few things that affect your chances:

• Zoning – Residential-zoned land is easier to finance than agricultural or commercial.
• Location – Urban lots are more appealing to lenders than remote ones.
• Utilities and access – Lenders prefer land that’s road-accessible and has nearby services.

Banks vs Private Lenders: Mortgage for Land in Canada

If a big bank says no, don’t give up. Private lenders and credit unions often fill the gap. I’ve seen many people secure financing this way when the traditional route didn’t work.

What Type of Land Can You Get a Mortgage For?

Buying land with a mortgage can be a great investment. It allows you to own property while making manageable payments. Be sure to research interest rates and loan terms before committing.

Let’s understand different types of land and how they are to get approved for a mortgage.

1. Residential Building Lots

• Often within city limits or subdivisions
• Easy to finance if zoning is confirmed
• Down payment: usually 20–35%

2. Agricultural Land

• Used for farming or commercial agriculture
• Financing is possible, but only with a strong income and a purpose
• May need to go through Farm Credit Canada or a private lender

3. Vacant Land

• Not developed, but within serviced areas
• The lender might want a building plan
• Down payment: 25–40%

4. Commercial/Industrial Land

• Used for business or investment
• Needs detailed documentation and business plans
• Higher scrutiny, but possible with the right paperwork

5. Rural Land

• Remote locations, cottages, or campgrounds
• Often needs private lenders or special programs
• Usually not financed by big banks

What Are the Eligibility Requirements for Land Mortgages?

To understand how to get land mortgage approval, start by ensuring you meet the eligibility requirements, such as a good credit score and stable income. 

Here’s what lenders are looking for when you apply for a land mortgage in Canada:

1. Good Credit Score

Most lenders expect a score of 680 or higher, especially if the land isn’t serviced.

3. Stable Income

You’ll need to show reliable income through employment, self-employment, or investments.

4. Larger Down Payment

Expect to put down 20% to 50%, depending on the land type and location.

5. Land Survey and Zoning

A clear survey and zoning certificate show the land is legal to develop and free from disputes.

6. Intent to Build

Some lenders only approve land mortgages if you plan to build a home within 1–2 years.

How Much Can You Borrow for a Land Mortgage?

You might wonder: “How much can I borrow?”

In land mortgages, lenders usually cap loans based on Loan-to-Value (LTV) ratios. Here's what that looks like:

Example:

If a piece of land costs $200,000 and you get 65% LTV:

• Mortgage = $130,000
• Your down payment = $70,000

The better the location and zoning, the more you can borrow.

How to Apply for a Land Mortgage in Ontario?

If you're financing land in Ontario, here’s a simple step-by-step to follow:

1. Get Pre-Approved

Reach out to a lender or mortgage broker (like LendingHub). Get a sense of how much you can borrow.

2. Find the Right Land

Make sure the land is properly zoned and has a recent survey.

3. Gather Documents

You’ll need:

• Proof of income
• Down payment proof
• Credit report
• Land details (survey, zoning, plan)

4. Submit Application

Submit your application for review. This may include additional checks, especially for raw land.

5. Final Approval and Funding

If approved, you'll get the mortgage funds, often with specific terms and timeframes.

Common Mistakes You Should Avoid:

• Not checking zoning before buying
• Underestimating down payment needs
• Forgetting about future development costs

What Are the Alternatives If You Can't Get a Land Mortgage?

If a traditional land mortgage doesn’t work out, don’t worry—there are other ways to finance land in Canada.

1. Private Lenders

They often accept lower credit scores and more flexible conditions. Interest rates may be higher, but approval is faster.

2. Land Loans

Some credit unions offer special “land-only” loans with short terms.

3. Construction Loans

If you’re planning to build soon, you can bundle the land and construction into one loan.

4. Home Equity Loan

Already own a home? Use your current equity to buy land without touching your savings.

Pros and Cons of Getting a Mortgage on Land

Getting a mortgage for land can be a smart investment, but it comes with its own set of pros and cons. Understanding both sides will help you make an informed decision when financing land for personal use or development.

Pros:

• You secure land before prices rise
   
• Build your dream home on your terms
   
• Use financing instead of paying full cash up front
   

Cons:

• Harder to qualify for
   
• Higher down payments
   
• Risk of zoning issues or delays in development
  
   

Final Verdict – Is Getting a Mortgage on Land Worth It?

So… can you have a mortgage on land? Absolutely.

But should you?

It depends.

If the land is in a good location, you have a plan to build, and your finances are strong, it’s a smart long-term move. But if you're unsure about how you’ll use the land or if you’re tight on cash, it might be better to explore private loans or wait until you’re ready.

Either way, always do your homework. Check zoning. Understand your financing options. And talk to an expert before signing anything.

FAQs About Mortgage for Land in Canada

Can I get a mortgage to buy raw land in Ontario?

Yes, but it's harder. Raw land with no utilities or zoning may require private lenders and higher down payments.

What’s the minimum down payment for a land mortgage?

Usually between 20% and 50%, depending on land type and lender policy.

Can I get a land mortgage without building immediately?

Yes, some lenders allow it, but many prefer you have a plan to build within 1–2 years.

Are land mortgages available from big banks in Canada?

Some banks offer them, but often with stricter rules. Credit unions and brokers offer more flexibility.