There is no universally agreed upon distinction in the industry. Our lot loan is generally a maximum of 10 acres. We can go to 20 acres if the property is in a subdivision of similarly sized parcels, as demonstrated by recent comparable sales of vacant parcels. On all lot loans, no structures are allowed on the property, whether of value or not. In general, lot loan programs have size limitations, as well as distinctions between finished lots (public water and sewer at the lot line), and unfinished lots which will rely on septic and/or private well, both of which are usually installed when construction begins. Lots must be buildable, and zone residential.
“Land loans” is a more general category. Our vacant land loan is for rural/agricultural acreage with limitations. That particular program won’t allow a residence on the property, but would allow outbuildings like sheds or barns if not given value. These properties would be zoned agricultural or agricultural/residential, and also must be buildable (see the program description for other limitations). Vacant land zoned commercial, industrial, multi-family or property that can be subdivided is very difficult to finance these days. One reason may well be the fact that to obtain a commercial construction loan or a land development loan is this difficult mortgage market, the land would probably have to be free and clear for the deal to “pencil out”. Commercial banks then have no motivation to do a vacant land loan, and they don’t want to take back non-income producing property.