A loan with collateral security of unimproved land in which, the loan to value ratio is lesser than on improved land which is known as land loan.  Land loans can act as major risk to banks because of the collateral.  According to bank, the land against which the loan is given itself is not being used by the borrower.  In this opinion, there are chances where borrower might walk away from his property leaving an unpaid loan behind. In order to guard themselves from this risk, banks demand a larger down payment and higher interest rates on land loans. It is also one of the procedures to ask anyone seeking land loans, as to what their plans are regarding the land. If the land is attached to any income, like farm land loans, the risk may be smaller. 

There are a few different types of land loans which are available in the market:

The Raw Land Loans : This loan has firm requirements compared to a loan for enhanced property with higher interest rates and more down payments.

Loans on Improved Vacant Land :  These types loans are the easiest type of land loan to avail when you have instant plans to use the property to build any building because the lender is assured that the loan will be repaid with the development of the mortgage when a structure comes up on the property making this type of loan is less risky.

Loans on Farm Land:  Before purchasing a farm land, it is advised to investigate about the various loan programs on farm lands through the Farm Service Agency (FSA).  The FSA makes loans and arranges for smaller loans, family-sized ranchers and farmers. The FSA has specific programs for people who are not qualified  for traditional  commercial loans through different banks or money lenders and if you are serious about farming, FSA programs are the best for  you.

Seller Financing:  Frequently, a seller finances the sale of the property or land that allows you to make payments to them over time. If you find this loan a good deal, after thorough discussion with your lawyer, you should make sure to examine the property to ensure that there are no hidden deficiencies and then go for it.

Home Equity Loan:  If you have equity in your existing house, you can consider a home equity loan to put money into your land loan and you can also get a much better interest rate since your home acts as collateral for the loan taken.
There are many online land loan lenders available who can allow you to compare quotation marks from the secrecy of your own home. When you are going for a land loan, you can easily expect higher interest rates and larger down payments. Next time you shop for your land, do keep in mind the types of loans available on lands and do not forget to try to find an improved piece of property to make it qualified for better rates.  You can consult your friends and relatives too or anyone you thing might be able to suggest.