Answers · Rates, LTV & Loan Structure
Should I take a fixed or floating rate on a short-term land loan?
On a 12–36 month land loan, fixed is usually the right call. The premium for fixing a short-term rate is small, and a floating rate turns your largest expense into a variable you cannot control during exactly the window you need certainty. Floating only wins if rates fall meaningfully during your hold.
Floating-rate notes on land are typically priced off SOFR or prime plus a spread, adjusting monthly or quarterly. Over a 30-year horizon, floating structures have arguments in their favor. Over 24 months, the math changes: even a full point of rate decline saves you 1% per year on the balance, while a rate spike can add the same or more — and short-term borrowers rarely have room in the budget for surprises.
The scenario that hurts is the one that clusters: rates rise, which raises your payment, and simultaneously makes your takeout refinance more expensive and land buyers scarcer. A floating rate correlates your carrying cost with your exit risk. Fixed decouples them.
If a lender offers floating with a cap, price the cap honestly — a cap 3 points above the start rate is not protection, it is a ceiling on the damage.
The Turnrow angle
Turnrow writes fixed rates on its 12–36 month terms, set per asset, so the payment on your term sheet is the payment through maturity.
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