Land is its own product
A house is collateral a lender can picture selling. A field is a promise. That difference is why a lot loan is written as a portfolio product by a local bank or credit union, on shorter terms and larger down payments than a mortgage, and why no agency rulebook governs it. Every figure below is typical practice from a named source, and the lender you talk to sets its own.
The trade splits land into three tiers, and where your parcel lands drives everything else (Rocket Mortgage, April 2026; Experian, November 2025):
- Raw. No utilities, no sewer, no road access. Hardest and most expensive to finance, and lenders usually want to see detailed development plans.
- Unimproved. Some infrastructure present, utilities still to be installed.
- Improved. Road, electricity and water already at the lot. Easiest terms.
Plenty of Chester County ground sits in the middle tier, where there is a driveway and a pole but the septic is still a theory.
What a lender wants to see before it lends on dirt
Four questions come up on almost every land file here, and three of them are county questions.
Can it take a septic? The Chester County Health Department administers the Pennsylvania Sewage Facilities Act, Act 537, and adopts 25 Pa. Code Chapters 71, 72 and 73 by reference. It issues the on-lot sewage permit, runs the site testing — soil probe, percolation testing, dual-depth perc tests, limiting-zone identification — and enforces a replacement-area policy, meaning the lot has to preserve a reserve absorption area as well as the primary one. A lot that percs in one spot and nowhere else is a lot with a problem.
Where does it sit in the township’s Act 537 plan? Every municipality keeps an official sewage facilities plan, and a new lot on on-lot sewage generally needs a planning module or an exemption before a permit issues.
How do you get to it? Written, enforceable access. USDA’s site rule is explicit about a hard-surfaced or all-weather road or driveway with maintenance arrangements in place, and shared gravel lanes are common on older parcels.
What utilities reach it, and what does connecting cost? Electric, water and any public sewer connection fees belong in the number before you sign.
The county’s electronic permit search will pull historic well and sewage permit designs, which is the cheapest hour of research available on an older parcel.
Where the well is allowed to go
A well is not a thing you site wherever the view is best. Chester County Health Department Rules and Regulations Chapter 500, section 501 requires a county permit to construct any well and to install pumping equipment, licenses the drillers and pump installers, and requires water to be drawn from a formation at least 25 feet below the surface.
Then come the isolation distances, measured from the proposed well: 100 feet from a sewage absorption area, cesspool or seepage pit; 50 feet from a septic tank or a gravity sewer line; 100 feet from a barnyard, manure pit or manure storage; 100 feet from a cemetery; 300 feet from a bio-solids or septage disposal area; 300 feet from fertilizer or chemical storage or a salt pile; 30 feet from a home heating-oil tank of 1,000 gallons or less; 25 feet from a delineated wetland or floodplain, a pond, a stream or a detention basin.
On five acres that is a geometry exercise. On a one-acre lot next to a working farm, it is sometimes the whole answer.
Down payment and term are lender policy
Nothing here is a rule, and the sources disagree enough to prove it. Experian, citing FDIC guidelines, puts typical minimum down payments at 35% for raw land, 25% for unimproved and 15% for improved (November 2025). Rocket Mortgage lists at least 25% among general qualifications, and at least 35% on raw land (April 2026). Terms generally run 5 to 30 years, with 20-year terms common in both sources.
Expect shorter terms, larger down payments and stronger credit requirements than a house would carry, for the reason at the top of this page. Local banks, credit unions and seller financing are the usual sources; SBA 504 financing, with 10 to 25 year repayment, applies to commercial land. All of it is subject to lender approval.
The bridge into a construction loan
The lot loan is usually a bridge, and each construction program treats the ground differently. FHA counts land owned more than six months at case-number assignment at appraised value, which is how lot equity becomes a down payment. VA can finance a lot acquired within one year of the VA loan closing as part of acquisition cost. Fannie Mae’s single-closing rules decide the loan-to-value basis on whether you owned the lot at the first advance, and its two-closing cash-out version requires six months of legal title before the permanent mortgage closes.
USDA sits out this part entirely: vacant land with no eligible residential improvements is ineligible under 7 CFR 3555.201, so the ground and the house have to arrive together.