Block Finder

House & land financing top tips

Buying a house is one thing, building a brand-new home on your own block of land is another. If you’re looking at a house and land package, understanding how the financing works is crucial. It’s a little different from a standard home loan, with some unique steps, benefits, and considerations. Here’s everything you need to know.

What is house and land financing?

House and land financing is a loan arrangement designed specifically for buyers purchasing a block of land and constructing a home on it. While marketed together as a “package,” the finance is usually split into two separate components:

1. Land loan – covers the purchase price of the block.
2. Construction loan – funds the build itself, usually released in stages.

This structure allows buyers to secure land first, then progressively draw down funds to pay the builder as the home takes shape.

Key things lenders look at

• Deposit – Most lenders require at least 5–10% of the combined land and build cost.
• Serviceability – Your income and expenses are assessed against both loans.
• Valuation – The lender will value the proposed home “as if complete” to ensure the project is financially sound.
• Builder documentation – Fixed-price building contracts, plans, and permits must be supplied.

If this all sounds a bit daunting, don't worry, our preferred finance partner Mortgage Domayne has award winning service that makes the whole process a breeze, including accessing any federal and state first home buyer schemes that you may be eligible for.

Buying land first v house and land package

Buying a house and land package is often better than purchasing land alone because it offers a streamlined process with fixed pricing, reducing the stress and unpredictability of coordinating separate land and construction contracts. It also typically requires a lower deposit and makes it easier to access government grants and financing options.

House and land package deposit

• Typically requires a combined deposit for both the land and the build.
• Most lenders ask for 5% to 10% of the total package price
• The deposit is split into:
• Land deposit – paid when signing the land sale contract
• Build deposit – paid before construction begins

Some lenders may allow low-deposit options (as low as 5%) if you're eligible for government grants or schemes, though Lenders Mortgage Insurance (LMI) may apply

Buying land separately

• Deposit requirements for land-only purchases can vary more widely
• Lenders typically require 5% to 20% of the land value
• Vacant land loans are considered higher risk, so:
• Interest rates may be higher
• Larger deposits may be required, especially if the land is unregistered or lacks infrastructure
• You’ll also need a separate construction loan later, which comes with its own deposit and approval process

Importantly, the First Home Guarantee scheme is only accessible if buying land and house – not if buying land without a building contract.

Government grants

There are numerous strong Government initiatives addressing first home owner affordability.

• First Home Owners Grant (FHOG) - If you are buying or building a new home, you could be eligible for the First Home Owner Grant of $10,000. Your new home must be valued at $750,000 or less and be a new home.
• First Home Guarantee (FHG) - 5% deposit, no loan mortgage insurance (LMI) for purchases up to $950k in Melbourne and regional centres of Victoria. Under the First Home Guarantee, you only require a deposit as little as 5%. Housing Australia then provides a guarantee to the lender covering up to 15% of the property’s value. The First Home Guarantee is an initiative from the Australian Government to support eligible first home buyers purchase a home sooner.