Land contracts can be an alternative to a non-conforming loan, this can be helpful for people who have not yet established credit or who need to improve their credit score. In a land contract the buyer agrees to make periodic payments to the seller and the seller holds title to the property until the obligations of the contract have been fulfilled. The buyer is said to receive equitable title which is an interest in real estate with the expectation of future title.

Advantages of land contracts are small closing costs, they can help establish a mortgage payment record, build credit and once the buyer has a good credit score he or she can refinance with a conforming loan.

Land contracts can also be risky, some land contracts are prohibited from being recorded making it easier for a seller to take the property back in the event of default. There are also no guarantees that the seller will be able to transfer a clear title to the buyer once the contract has been fulfilled, or that the condition of the property is suitable and the price is justified.