If I obtain a 10 year land loan and but finance the build of a house with my own money will I be able to refinance that land loan into a conventional 30 year mortgage loan eventually?

  • 3
    That will be up to the bank. Probably yes, but that will depend on a lot of details you haven't given us.
    – keshlam
    Commented Jan 22, 2016 at 2:27
  • 1
    If so, you should post that as an Answer, not a Comment. (Yes, you are allowed to answer yourself.) I haven't seen that particular approach, so you might want to say where it is possible and common; this is going to depend on how the rulesare written in your country/state/whatever.
    – keshlam
    Commented Feb 1, 2016 at 19:05
  • To add, a simple dwelling could be a mobile unit; adding a water supply (well, rain catcher or public installed) with sanitation (septic tank or public) and electricity (solar, generated or again public) you would have most all of the basics for a dwelling. Not sure about all of the codes needed for your area or what differentiates the difference between land and a dwelling, but that's where I would start... good luck!
    – SuperD
    Commented Mar 3, 2016 at 4:22

2 Answers 2


The idea is simply to covert a small land loan into a conventional mortgage will save you thousands in interest. Mortgage loans will always be lower than any land loan. This is the reasoning behind building a small dwelling. You will be able to pay off your mortgage much faster than the simple land loan. However you want to use the savings is irrelevant, the point of the matter is that it is possible to convert a land loan into a mortgage loan once a dwelling is built. -Joe Hernandez-

  • In doing so, you are likely going to need to make a statement that you intend on living in the property (mortgages are typically on the best terms when they finance your residence, where the bank feels you are more likely to stay attached to). Make sure that any such statement you make, is a truthful one. Commented Jul 17, 2018 at 16:16

The Answer is yes according to multiple online sources and my local bank. This approach is a common technique to building your own home. You finance the land, build the simplest possible dwelling (say a garage with 1 bathroom/bedroom), refi into a mortgage and get cash back and then build your "real house" or add on, etc. This eliminates the banks demands that come with a "construction loan" and saves you 10s of thousands in the process (fees, contractors, scheduling, design, etc)

  • 3
    This strategy seems to make no sense. You owe for the land purchase, then you build a "small" house on it, paying cash for the building, and then ask the bank to give you a mortgage on it, thus freeing part of the cash that you paid for the "small" house, and then you use that cash to build the "real" house that you wanted to build? And all this is saving you tens of thousands of dollars and hassles? For the way that construction loans actually work, see this answer or the ones following this question Commented Feb 3, 2016 at 4:19
  • 2
    Specific citation? Common where? Like Dilip, I'm having trouble seeing where the claimed savings could possibly be coming from.
    – keshlam
    Commented Mar 3, 2016 at 6:19
  • 3
    A cash back mortgage on a garage with a toilet on one side and a bed on the other, should (hopefully) not provide you with enough cash to build an entire house. That would imply getting many times the value of your 'dwelling' back in cash, when the banks prefer you to have (or, depending on jurisdiction, require you to have) a certain equity percentage left in the home value, not given as cash back. ie: they want to lend you something like 80%-95% of the value of what you own. Anything that sounds like it 'gets around' lending rules might be just a pen stroke away from fraud... Commented Aug 30, 2016 at 14:42
  • 3
    In the U.S.: This approach is useful because the interest rates on home mortgage loans are much lower than on lot loans. Home mortgage loans offer higher loan-to-value ratios, such as 90% instead of 70%. And home mortgage loans offer longer amortization periods (such as 15, 20, or 30 years instead of 2 or 20 years). Even if the appraisal value is the same, refinancing from a lot loan to a mortgage loan can produce a lot of cash back and much lower payments.
    – Jasper
    Commented Oct 29, 2016 at 15:42
  • 2
    A citation of some kind would be great here. Unless the land is so disproportionately valued compared to the house, the math won't work. Commented Jan 11, 2017 at 18:08

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .