Raw Land & Subdivision Development Loans in Massachusetts

Subdivision development is typically financed through an acquisition and development loan from a private lender or commercial bank. The developer provides a detailed pro forma, approved zoning permits, and equity — usually 20% to 35% of the total project cost. Norfolk Capital funds up to 85% of the land value and hard development costs, disbursing capital in draws as infrastructure milestones are completed and inspected.

A land loan finances the purchase of raw or unimproved land only. A development loan goes further — it provides capital to add horizontal infrastructure to that land, including roads, water and sewer lines, grading, and utility connections, turning raw acreage into buildable lots. Norfolk Capital can structure financing that covers both the acquisition and the development phase under a single loan.

Most lenders require developers to contribute between 25% and 35% of the total project cost in cash equity. Norfolk Capital funds up to 85% Loan-to-Cost for qualified developers, meaning you bring as little as 15% of the combined land value and hard construction costs. The exact equity requirement depends on the project complexity, your development experience, and the strength of the exit strategy.

Yes — and Norfolk Capital requires it. All of our lending is structured for non-owner-occupied investment properties held within a corporate entity such as an LLC. This designates the loan as business-purpose financing, provides liability protection, and separates the project from your personal assets. The lender will typically require a personal guarantee from the LLC's principal members.

When no existing building sits on the lot, Norfolk Capital requires an Environmental Screen Report before underwriting begins. This assessment identifies potential contamination, wetlands concerns, or other environmental risks that could affect development. It protects both the borrower and the lender from unforeseen complications during the permitting and construction process.

The development budget is held in a secure escrow reserve at closing, and interest is generally not charged on those funds until they are drawn. As each phase of work is completed — grading, utility installation, road paving — the developer submits a draw request. A Norfolk Capital team member inspects the site, typically within 48 hours, to verify the work before releasing the corresponding funds. The draw schedule is agreed upon before closing based on a granular scope of work.

Once horizontal infrastructure is complete and the lots are buildable, developers typically transition into vertical construction financing. Norfolk Capital offers new construction loans that pick up where the land development loan ends — funding the actual building phase for residential, multifamily, townhome, or mixed-use projects. This single-lender relationship across both phases streamlines the process and eliminates the need to re-underwrite with a new institution.

Through traditional banks, yes. Raw land cannot generate income immediately and is harder to liquidate if the borrower defaults, so conventional lenders view these loans as high-risk — often requiring 30% to 50% down payments with lengthy approval timelines. Private lenders like Norfolk Capital take a different approach, evaluating the development plan, the site's potential, and the borrower's experience rather than applying rigid banking criteria. Experienced developers with a clear scope of work and a viable exit strategy can secure land financing significantly faster through private capital.