# How does lot purchase financing work?

> Vacant lot mortgages typically require a minimum 20% down payment with higher interest rates than residential mortgages.

Category: Financing
Last verified: 2026-04-14
Source: https://ratellow.com/faqs/financing/how-does-lot-purchase-financing-work

## Answer
Vacant lot mortgages typically require 25-50% down with higher interest rates than residential mortgages. Terms are usually 1-3 years. Some lenders offer combined lot+construction packages where the lot purchase is the first draw. Municipal zoning confirmation and environmental assessments may be required before approval.

## Related guide
- https://ratellow.com/guides/construction-mortgages-canada

## Sources
- CMHC Progress Advance Program — https://assets.cmhc-schl.gc.ca/sf/project/cmhc/pdfs/factsheets/new/cmhc-quick-reference.pdf
- B-20 Construction Lending Standards — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#2.5.4