Palm Springs Land Lease Mortgage Guide 2026 | DiVita Home Finance

If you’re shopping for a home in Palm Springs, there’s a good chance you’ll encounter properties where the house sits on land leased from the Agua Caliente Band of Cahuilla Indians. This surprises buyers from outside the market — and causes unnecessary alarm, confusion, and sometimes lost deals when buyers are working with lenders unfamiliar with how these properties work. I’ve been financing Palm Springs land lease properties since 2007 and have closed loans on dozens of them. I’m Michael DiVita — DRE #01372066 | NMLS #241655, DiVita Home Finance (DRE #01818285 | NMLS #323700), Tiburon, CA. Call (800) 239-1103.

What Is a Land Lease Property?

When you buy a traditional fee-simple home, you own both the structure and the land beneath it. With a land lease property, the land is owned by a third party — in Palm Springs, primarily the Agua Caliente Band of Cahuilla Indians — and you pay periodic ground rent for the right to use it. You fully own the home itself; you’re leasing the ground it sits on.

This is not exotic or fringe. Approximately 30% of all properties within the City of Palm Springs sit on Agua Caliente tribal trust land, including many of the market’s most desirable mid-century modern neighborhoods: Little Tuscany, the Movie Colony, Tahquitz River Estates, and portions of Movie Colony East. Some of the most architecturally significant homes in Palm Springs are on leased land.

The History of the Agua Caliente Land Leases

The Agua Caliente Band of Cahuilla Indians has inhabited the Coachella Valley for thousands of years. Under an 1876 executive order, the federal government established a checkerboard land grant alternating between tribal and government-owned sections throughout the original Palm Springs townsite. When Palm Springs began developing in the early 20th century, developers leased tribal land and built homes on these leasehold parcels. Over time, leases were sold, assigned, and renewed, creating the patchwork of fee-simple and leasehold properties that defines the Palm Springs market today.

The Critical Variable: Remaining Lease Term

The single most important factor in financing a land lease property is how many years remain on the lease. Most conventional mortgage lenders require the lease to extend at least 10 years beyond the loan maturity date. For a 30-year mortgage, that means a minimum of 40 years remaining at closing.

Many existing leases were established in the 1940s–1970s with 65-year terms. Leases from the 1960s that haven’t been renewed may have limited time remaining. Checking lease status before writing an offer is essential — it determines financing eligibility and the pool of future buyers when you eventually sell.

Loan Programs for Palm Springs Land Lease Properties

VA Loans

VA loans have historically been one of the most accommodating programs for Agua Caliente land lease properties. The VA has specific approval criteria for leasehold estates and will guarantee loans on qualifying properties. Key requirements: lease extending at least 25 years beyond loan maturity, the lease being assignable to the veteran purchaser, and specific leaseholder protections. Zero down, no PMI — VA is excellent for eligible veterans purchasing in Palm Springs.

FHA Loans

FHA will insure loans on leasehold estates that meet HUD’s requirements, including a minimum remaining lease term and specific protections for the lender and borrower. In practice, FHA approval depends heavily on the specific lease terms and remaining time. Not every FHA lender processes these files — lender selection matters.

Conventional (Fannie Mae / Freddie Mac)

Both agencies have land lease eligibility guidelines. Fannie Mae requires the lease to extend at least 10 years beyond mortgage maturity and include lender protections. Freddie Mac has similar but not identical requirements. Not all conventional lenders overlay these programs with leasehold eligibility — working with a broker who knows which lenders actively finance Palm Springs land lease properties is essential.

Portfolio Programs

For land lease properties that don’t meet agency guidelines — typically due to shorter remaining lease terms — portfolio lenders offer an alternative. They hold the loan on their own balance sheet rather than selling to the secondary market, allowing more flexibility. Rates are typically slightly higher but competitive for qualified borrowers.

Ground Rent: What to Budget

Ground rent is paid to the Agua Caliente on a schedule specified in the lease — typically monthly or annually. The amount varies by lease and is periodically adjusted based on fair market value appraisals of the land. When evaluating a land lease purchase, obtain the current ground rent amount and understand when the next rent adjustment is scheduled. Ground rent is a carrying cost that factors into your total housing expense and therefore your DTI.

Due Diligence Checklist

• Obtain a copy of the current lease and identify the expiration date and remaining term
• Confirm the lease is assignable (transferable to the buyer)
• Get the current ground rent amount and next escalation date
• Verify lease renewal rights and the renewal process
• Confirm your title company is familiar with leasehold title in Palm Springs
• Check lender eligibility before writing an offer — not all programs available for all lease terms
• Confirm the lease has been recorded with Riverside County

Frequently Asked Questions

Related Resources

• Palm Springs Mortgage — Full Service Hub
• Palm Springs Leased Land Mortgage — Service Page
• Palm Springs Airbnb Investment Mortgage Guide 2026
• Agua Caliente Indian Land Financing