House & Land Package Loans Australia
Quick Answer
How does a house and land package loan work?
Land settlement first, then construction draw-downs
House and land packages combine a land purchase with a signed building contract. The loan is typically split into a land settlement component and a construction draw-down, with funds released in staged progress payments as each build stage completes. You generally only pay interest on what has been drawn down at each stage.
- Typical LVR Up to 80% to 90%
- Progress payments 5 to 6 build stages
- Contract required Fixed-price build contract
- FHB schemes May apply to new builds
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Two factors that shape your house and land package loan
Land settlement and valuation
The lender assesses the land value independently at the time of settlement. If the land valuation comes in below the contract price, your effective LVR increases. Location, zoning, estate stage and comparable sales in the area all affect how lenders view the land component.
Security Risk
Fixed-price building contract
Most lenders require a fixed-price contract from a licensed builder before approving the construction component. This sets the total build cost, the progress payment schedule and the completion date. Variations outside the contract are generally not covered by the approved loan amount and must be paid from your own funds.
Construction RiskTypical LVR ranges for house and land package loans
These are general guide ranges only. Final terms depend on total land and build cost, valuation, borrower profile and lender policy.
-
Up to 80% LVR Standard package, no LMI required
-
Up to 85% LVR With lenders mortgage insurance
-
Up to 90% LVR Strong borrower with LMI approval
-
Up to 95% LVR First Home Guarantee eligible buyer
The LVR is calculated against the lesser of the total land and build cost or the end valuation. Lenders will generally not approve more than the as-if-complete value of the finished property.
Buying a house and land package?
What lenders look for in a house and land package loan
House and land package loans are assessed on the total land and build cost, the borrower's income and serviceability, and the strength of the building contract and builder.
Signed fixed-price contract with a licensed builder- Land valuation supporting the purchase price
- Sufficient deposit or genuine savings
- Clear income and serviceability across the build period
- Builder approval from the lender's accredited builder list
Self-employed borrowers with limited income evidence may want to explore low doc construction loans as an alternative pathway.
Common house and land package types financed
Most residential lenders will consider house and land packages where the land, builder and contract are clearly documented and the total cost supports the valuation.
New estate homes- Display home builds
- Turnkey packages
- Off-the-plan H&L
- Regional new builds
If you want to build on land you already own, see residential construction loans for the applicable loan structure.
Key factors for house and land package finance
These factors usually determine whether a house and land package loan suits a standard bank, a lender with LMI, or a specialist construction lending pathway.
01
Land contract
The land and build are typically two separate contracts. The land usually settles first, which triggers the initial loan draw-down before construction begins.
02
Builder accreditation
Most lenders require the builder to be licensed and, in some cases, on the lender's approved builder list. An unaccredited or unknown builder can delay approval.
03
End valuation
Lenders assess the as-if-complete value of the finished home. If the total land and build cost exceeds the end valuation, the LVR rises and the lender may reduce the approved amount.
04
Deposit source
Lenders check that your deposit comes from genuine savings or an acceptable equity source. Gifted funds may be acceptable but must be disclosed at application.
05
Build timeline
The construction loan approval period is usually valid for 12 to 24 months. If the build takes longer, you may need to renegotiate or extend the approval with your lender.
06
First home buyer eligibility
New builds often qualify for state first home owner grants and federal guarantee schemes. These can reduce the deposit required or offset stamp duty, subject to price caps and income tests.
Common problems with house and land package finance
Most house and land finance issues come down to timing, contract structure or valuation gaps between the agreed price and what the lender will fund.
Land valuation comes in short
If the independent land valuation is lower than the contract price, your effective deposit shrinks and the lender may not fund the full amount you expected.
Review comparable land sales in the estate before signing the land contract.
Builder not on the lender's approved list
Some lenders only fund builds with accredited or approved builders. Using an unlisted or small-volume builder can cause delays or require switching to a different lender.
Confirm your builder's status with your lender before signing the building contract.
Build cost variations add up
Site costs, upgrades and variations outside the fixed-price contract are not covered by the approved loan. These extras must be funded separately and can run into tens of thousands of dollars.
Get a detailed site cost report and review inclusion lists carefully before signing.
Loan approval expires before build completes
Construction loan approvals typically have an expiry period. Builder delays, estate titling issues or council holdups can push the build past the approval window.
Confirm the approval validity period with your lender and ask about extension options early.
How to get a house and land package loan in 6 steps
Step
01
Choose your block and builder
Identify the estate, lot and builder you want to use. Check that the builder is licensed and that the package pricing includes all standard inclusions.
Step
02
Get pre-approval before signing
Apply for pre-approval before committing to the land or building contract. This confirms your borrowing capacity and helps you avoid signing contracts you cannot fund.
Step
03
Sign land and building contracts
Once pre-approval is in place, sign the land contract and the fixed-price building contract. Both are submitted to the lender as part of the formal loan application.
Step
04
Formal approval and valuation
The lender orders an end valuation of the completed home. If the valuation supports the contract price and your financials are clean, formal approval is issued.
Step
05
Settle on the land
The land component of the loan settles first. From this point, interest is charged on the land balance while the builder prepares to commence construction.
Step
06
Draw down in progress payments
As each build stage completes, the lender releases the next progress payment to the builder. Once construction is finished, the loan converts to a standard home loan.
How house and land package loans work in Australia
A house and land package is a property purchase where the buyer secures a block of land and a building contract at the same time, typically through a developer or builder operating in a new estate. The finance used to fund this purchase is structured differently from a standard home loan because the completed property does not exist when the land settles.
The loan is usually split into two components. The first funds the land settlement, and the second is a construction loan that draws down in staged progress payments as each phase of the build is completed. The typical stages are slab or base, frame, lockup, fitout or fixing, and completion. You can read more about how these payments work in our guide to construction loan draw-downs.
During the construction period, you generally only pay interest on the funds that have been drawn down rather than the full approved loan amount. This means repayments are lower during the build, but they increase once the loan is fully drawn and converts to principal and interest repayments after completion.
First home buyers purchasing a house and land package may be eligible for state first home owner grants and federal guarantee schemes that apply to newly built properties. Price caps and income thresholds apply and vary by state. Eligibility should be confirmed with a qualified finance specialist before signing any contracts. For a full overview of first home buyer schemes, see first home buyer loans.
Get help with your house and land package finance
House and land package loans involve two contracts, staged draw-downs and builder requirements that vary by lender. Getting the structure right before you sign can save significant time and cost.
Property Finance Help connects users with finance professionals who understand construction lending, new estate purchases and first home buyer scheme eligibility.
Property Finance Help is a lead generation service, not a lender, broker, or financial adviser. All information on this website is general in nature and does not take into account your personal objectives, financial situation, or needs. Consider seeking independent professional advice before making any financial decision.
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